A stagnant US economy on the edge of recession (assuming we are not there already). What to do? A recent article appearing in the ******ian Science Monitor, typically one of the more consistently trusted sources of information out there, points out that billions of dollars could be generated from the online gambling industry should Rep. Barney Frank (D) of Massachusetts have his way.

Frank is expected to hold congressional hearings next month to explore overturning the 2006 Unlawful Internet Gambling Enforcement Act "and replace it with legalized online betting, which in turn could generate taxes and fees to the tune of billions of dollars," the Monitor acknowledged on Tuesday.

The UIGEA was designed to cut off online gambling transactions via the monetary institutions that process them. The new law updates old legislation that prohibits phone wagers from being taken on US soil by applying the concept to the Internet. It does not hold actual gamblers criminally liable.

The article raises concerns over the so-called "minority of players who become addicted to gambling".

According to the Monitor, "the percentage of American college students who gamble online fell to 1.5 percent from 5.8 percent the year before." Most of these college students had no other choice but to now bet either locally with a corner bookie or make their wagers through "credit operations" running their businesses offshore. The UIGEA has effectively forced this "vulnerable" group to place their wagers underground as opposed to companies that require an initial deposit (i.e. you can't bet what you don't have).

The UIGEA was an ill-conceived measure that is full of holes and conflicting positions. On one hand, online poker is illegal. On the other hand, online horse racing is not. The later is one of a handful of exemptions that have served to make the UIGEA "policy enforcement" a near impossible task.

And then there is this:

Complicating the issue are concerns expressed by the European Union that the US is not playing fairly according to World Trade Organization rules. The EU, which favors Internet gambling, points out that the current American law doesn't ban Internet gambling on horse racing in the United States. And the US law discriminates against European-based online gaming companies, EU officials say. The EU plans to investigate the law over the coming months with the possibility of filing a complaint to the WTO.

Betting establishments in EU countries would love to return legally to the US market and see the inconsistency in the US law as a handy wedge to force the US to back down.

The compromise:

A bill by Rep. Shelley Berkley (D) of Nevada would fund a study of online gambling by the National Research Council, an arm of the National Academy of Sciences.

"Gathering better data on the effects of this form of gambling is a better first step than a rushed and ill-considered chase after tax revenues on gambling," The Monitor concludes.

Online gambling is already a billion dollar industry. Much of that money has gone towards boosting the economies in Europe, however.

Gambling911.com
Publisher CCostigan@CostiganMedia.com
Originally published March 25, 2008 9:56 am EST