Internet Gambling Nuttiness

I was about start a long rant about the absurd new anti-Internet gambling bill that Congress just passed but then I read Mike’s post over at TechDirt and realized there’s not much more I can add beyond what he’s already said there.

I have to admit though that the “shoot the middleman” approach the government used here could be quite effective at shutting down online gambling in the U.S. in the short term. No major financial intermediary will want to risk violating the new law’s prohibition against the use of credit cards or other financial instruments as a clearance mechanism.

What will be interesting now, however, is the extent to which alternative online financial mechanisms develop to fill the void. After all, I hope that members of Congress aren’t so naive as to believe that this bill will actually eradicate all online gambling. If there’s one thing we know from history it’s that humans have an insatiable appetite for wagering (an appetite that government is all too willing to take advantage of through state lotteries and heavily-taxed casinos). But whenever unsanctioned gambling is in question, government officials turn the debate into a morality play and claim that their regulatory efforts are meant to protect us (or our children, of course) from the supposed evils of using one’s money to enjoy one’s self.

So, what will happen now that all the “mainstream” financial intermediaries are being run out of town? It remains to be seen. But I’m willing to bet (pun intended) that some crafty, innovative people out there in the online world will find ways to get around this ban. Sadly, however, a lot of people will probably have to go completely “underground” to do it. And we shouldn’t be surprised if a shady element enters the scene to try to get a cut of this business. (New Jersey mafia members, call your office!)

Update: After writing this last night I picked up Washington Post this morning and found this interesting article by Mary Jordan about how cell phones are making money transfers instantaneous and dirt cheap for people across the globe. Could this be an evasion technique for determined Net gamblers? Perhaps, but I suppose the feds will then just threaten all domestic cellular companies with serious liability if they assist in completing those financial transactions.

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