The Good News About The Online Gambling Ban

At Uncommon Sense, Rich Nikoley writes:

How many of you realize that when the politicians in D.C. talk about “online gambling,” they are talking about legitimate, publicly-traded companies listed on the London stock exchange, with market capitalization in the billions of dollars, regulated in a manner similar to publicly-traded companies in the U.S.? Sure, at one time, the industry was largely composed of rogue con-men operating in tax havens offshore with laws specifically designed to flaunt civil and criminal action.”

Online gambling isn’t mostly legit because it’s been regulated by government; it’s regulated by an efficient free market – there’s simply a whole lot more money to be made offering an honest game than a crooked one, on the net.

The good news about this law is that the online gambling market isn’t going away. Entrepreneurs are not going to abandon the vast profits that have already been demonstrated. Internet markets are going to route around such legal obstacles. This law, if it is enforced, will spur efficient black markets like nothing ever has.

And that will turn out to be a very good thing.

8 thoughts on “The Good News About The Online Gambling Ban”

  1. John:

    Just to clarify, I wasn’t saying that the regulation is what legitimizes it (at least, that’s not what I was _meaning_ to say). I was simply trying to dispell the notion that they were seedy operations because they were operating offshore.

  2. They will be markets in what the feds call money laundering – concealing your money trail from the prying eyes of government. The examples are already there. The feds scared credit card companies out of funding gambling accounts, the market routed around that. Paypal became the favored alternate route. The feds then scared Paypal out and the markets routed around that.

    What a lot of online gamblers don’t realize yet is that they now have funds in offshore accounts out of sight of their governments, something which used to be a pain in the ass to set up but which the gambling sites have made dead easy. Such accounts in principle have implications that go far beyond gambling. There’s no reason in principle such accounts can’t be used for investment, shopping and to diversify into competing currencies, including private ones.

    The gamblers may not realize it yet, but entrepreneurs do.

    “The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.”

  3. Unfortunately, the sites have (quite rationally) decided that they’re next and are cutting off access from US IP addresses. It doesn’t matter that Neteller is in Antigua if your gambling site says, “Yanqui, go home.” The only other options for American gamblers are:

    1. Leave the country.
    2. Play on sites that are not under the scrutiny of law and whose practices cannot be challenged in court.
    3. Quit gambling.

    In any case, like every black market, it will be wildly inefficient and expensive, prone to operation by criminals and hucksters, and possibly violent. Your optimism is completely unfounded.

  4. The only other options for American gamblers are:

    1. Leave the country.
    2. Play on sites that are not under the scrutiny of law and whose practices cannot be challenged in court.
    3. Quit gambling.

    I’ll take option 2. It sound great to me. Bring it on!

    In any case, like every black market, it will be wildly inefficient and expensive, prone to operation by criminals and hucksters, and possibly violent.

    As an avid online poker player, I see very little problem with leaving the umbrella of government regulation for an open market on the internet. There are so many potential advantages to come out of the United States ban on online poker. I’m looking forward to it.

  5. Josh,

    Give me option 2 any day. You’re not getting it: A free market will produce a better product than government oversight ever could. There is far more money to be made in fair games than by cheating in an efficient market, and the internet provides an efficient market for gambling because switching costs between service providers is so low.

    Option 2 is a strain of anarcho-capitalism.

  6. Josh,

    In any case, like every black market, it will be wildly inefficient…

    Not really. I’d instead say that some of the resources that under a government-controlled market would be spent on providing better goods and services would be spent on other things (like protection from government).

    … and expensive,…

    Compared to what?

    … prone to operation by criminals…

    Yah, by definition.

    …and hucksters, and possibly violent.

    Force and fraud are much easier to deal with when your only commodities are information. An offshore gambling installation doesn’t need the same levels of physical security that a neighborhood dope dealer does. And it doesn’t seem that the neighborhood dope dealer has much incentive to burn his customers – he wants them back, right?

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