Stacking the Deck in Fight Over Online Gambling Ban

After the FCC’s radical decision to regulate the Internet as a public utility through the misuse of a 1934 law, the last thing we need right now is even more government control over the Internet. Yet, that is exactly what Rep. Jason Chaffetz (R-Utah) is attempting to do by proposing legislation that would federally prohibit online gambling.

New Jersey, Delaware, and Nevada have all recently legalized online gaming, and an increasing number of other states are moving in the same direction. The legislation being pushed by Chaffetz is a naked attempt to advance the crony interests of GOP mega donor, and casino magnate, Sheldon Adelson. While this provokes questions about the motives of Congressman Chaffetz, and the other Republican supporters of this bill, it also undermines the principles of federalism and states’ rights that they claim to believe in.

Perhaps most shockingly, proponents of the bill won’t give opponents of the legislation a seat at the table, because when it comes to this legislation, the deck is stacked in the House’s favor.

The House Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on which Chaffetz sits planned to hold a hearing Thursday to discuss the pros and cons of banning online gambling outright (it was postponed due to weather). Critics say Committee members boxed out conservative opposition from the hearing, in favor of hosting an exercise in political theater designed to raise the bill’s profile and push it forward, allowing only proponents of the legislation to testify.

For example, experts from free market groups such as the Competitive Enterprise Institute, a free-market think tank, had hoped to testify on the negative aspects of an online gambling ban but were blocked from doing so. Free-market opponents of Chaffetz’s bill also say they were denied access to a room at which they could brief House staff on problems with the bill. Instead, one free-market expert who opposes the legislation said she planned to submit written testimony to the committee and hold a conference call for House staff.

Unfortunately, too many Republicans in Congress are willing to abandon our free-market system, turning to cronyism instead, to ensure that Adelson’s interests are protected and that he maintains a competitive edge.

Right now of the three states that allow online gambling, two of them – New Jersey and Nevada – already have lucrative, established gaming industries. Is it any wonder, then, that supporters like billionaire casino mogul Sheldon Adelson are “willing to spend whatever it takes” to kill prospective online competition? In fact, he has already hired a team of lobbyists and PR gurus to convince Congress to do just that.

Just as with prohibition, the attempt to stamp out gambling through legislation is a fool’s errand. The black-market gambling feared by proponents of an online ban already exists in shady operations run from overseas well outside of state jurisdiction, with the profits from these enterprises ending up in the hands of unsavory and potentially dangerous recipients.

As a coalition of free-market groups has pointed out, it would be far better to allow states to open up the playing field to online ventures, and thereby ensure greater consumer protection. They also note that sending the issue to the states would keep the federal government from starting down the potentially slippery slope of heavy handed regulation of the Internet, and opening Pandora’s Box in terms of increased government involvement in the future.

At the very same time that Congressman Chaffetz and Republicans are criticizing President Obama for advancing crony interests by regulating the Internet at the FCC, they are doing the exact same thing in Congress.

Unlike a game of poker, when it comes to legislating gambling, there’s a way for everyone to walk away a winner. Congressional Republicans need to stand up against cronyism, support free market policies, and protect federalism.

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Erik Telford is Acting President of the Franklin Center for Government & Public Integrity. Follow him on Twitter: @BlameTelford