Six Principles for Successful Internet Gambling Regulation

by on November 13, 2012 · 1 comment

Today the Reason Foundation publishes my policy brief on keys to successful state regulation of Internet gambling.

Thanks to a Department of Justice’s December 2011 memo on the parameters of the Wire Act, states can now license real-money intrastate online casino games. Earlier this year, Nevada became the first state to permit online wagering, and in August granted the first online operating license to South Point Poker LLC, which was to have launched trials last month. Since the Reason report went to press, South Point disclosed that its software is still undergoing independent testing but  hopes to have its site up by the end of the year.

Elsewhere, Delaware has enacted legislation to authorize online gambling under the auspcies of the state lottery commission and Illinois has begun selling lottery tickets online.

It goes without saying that U.S. citizens should be free to gamble online, just as they legally can in casinos throughout the country. The degree of regulation is subject to debate, but unfortunately remains a necessary element in policy. Yet lessons about taxation and regulation can be learned from experiences in Europe, as well as from regulation of brick-and-mortar casinos in the U.S. With a better understanding of usage trends, consumer game choices and operator cost models, legislators who want to offer constituents the freedom to play online can craft an environment that supports a robust online gaming climate, as opposed to one that drives legitimate operators away.

Regulation should derive from an enlightened approach that respects the responsibility and intelligence of its citizens. Internet gambling can be a safe, secure pastime.  Overall, the government’s only goal should be to protect users from theft or fraud. Gambling should not approached as an activity that needs to be controlled or discouraged under the rationale that it is a “sin” (to moralists) or “destructive behavior” (to social utilitarians), and then, hypocritically,  politically tolerated so it can be excessively taxed on those rationales.

Although it is likely states will differ in the particulars of how they structure the license and tax arrangements, a successful climate for legalized Internet gambling is likely to derive from the following fundamental principles. Lawmakers should heed the following guidelines:

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Matt Hindman on politics and the internet

by on November 13, 2012 · 0 comments

In the wake of the election, Matt Hindman, author of The Myth of Digital Democracy, analyzes the effect of the internet on electoral politics. 

According to Hindman, the internet had a large—but indirect—effect on the 2012 elections. Particularly important was microtargeting to identify supporters and get out the vote, says Hindman. Data and measurements—two things that the GOP was once ahead in, but which they have ceded to the Democrats in the past 8 years—played a key role in determining the winner of the presidential election, according to Hindman. 

Hindman also takes a critical look at the blogosphere, comparing it to the traditional media that some argue it is superseding, and he delineates the respective roles played by Facebook and Twitter within the electoral framework.

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Event Next Week: Previewing the World Conference on International Telecommunication

by on November 8, 2012 · 0 comments

As some of you know, I’ve been closely following the World Conference on International Telecommunication, an international treaty conference in December that will revise rules, for example, on how billing for international phone calls is handled. Some participants are interested in broadening the scope of the current treaty to include rules about the Internet and services provided over the Internet.

I haven’t written much publicly about the WCIT lately because I am now officially a participant—I have joined the US delegation to the conference. My role is to help prepare the US government for the conference, and to travel to Dubai to advise the government on the issues that arise during negotiations.

To help the general public better understand what we can expect to happen at WCIT, Mercatus has organized an event next week that should be informative. Ambassador Terry Kramer, the head of the US delegation, will give a keynote address and take questions from the audience. This will be followed by what should be a lively panel discussion between me, Paul Brigner from the Internet Society, Milton Mueller from Syracuse University, and Gary Fowlie from the ITU, the UN agency organizing the conference. The event will be on Wednesday, November 14, at 2 pm at the W hotel in Washington.

If you’re in the DC area and are interested in getting a preview of the WCIT, I hope to see you at the event on Wednesday. Be sure to register now since we are expecting a large turnout.

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AT&T Accelerates Internet Transformation with Massive Investment in Broadband Infrastructure

by on November 8, 2012 · 1 comment

Yesterday AT&T announced that it would invest an additional $14 billion in the next three years to expand its 4G LTE network to cover 300 million people and expand its wired all-IP broadband infrastructure to 75 percent of its customer locations throughout its 22-state wired service area. For many consumers, this investment will provide their first opportunity for access to high-speed broadband at home. For many others, it will provide their first opportunity to make a choice among competing providers of high-speed broadband services. This impressive commitment to transition outdated communications infrastructure to an all-IP future will benefit millions of consumers and accelerate our Internet transformation nationwide. Continue reading →

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Chris Anderson on 3D Printing and the Maker Movement

by on November 6, 2012 · 0 comments

Chris Anderson, former Wired magazine editor-in-chief and author of Makers: The New Industrial Revolution, describes what he calls the maker movement.

According to Anderson, modern technologies, such as 3D printing and open source design, are democratizing manufacturing. The same disruption that digital technologies brought to information goods like music, movies and publishing will soon make its way to the world of physical goods, he says.

Anderson tells the story of his grandfather, who designed the first automatic sprinkler system in the 60s, and how different such an invention story would be today. He also discusses his own firm, 3D Robotics, and policy challenges to emerging manufacturing technology.

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The Precautionary Principle Meets Driverless Cars in DC

by on November 4, 2012 · 2 comments

The precautionary principle generally states that new technologies should be restricted or heavily regulated until they are proven absolutely safe. In other words, out of an abundance of caution, the precautionary principle holds that it is “better to be safe than sorry,” regardless of the costs or consequences. The problem with that, as Kevin Kelly reminded us in his 2010 book, What Technology Wants, is that because “every good produces harm somewhere… by the strict logic of an absolute Precautionary Principle no technologies would be permitted.” The precautionary principle is, in essence, the arch-enemy of progress and innovation. Progress becomes impossible when experimentation and trade-offs are considered unacceptable.

I was reminded of that fact while reading this recent piece by Marc Scribner in the Washington Post, “Driverless Cars Are on the Way. Here’s How Not to Regulate Them.” Scribner highlights the efforts of the D.C. Council to regulate autonomous vehicles. A new bill introduced by Council member Mary Cheh (D-Ward 3) proposes several preemptive regulations before driverless autos would be allowed on the streets of Washington. Scribner summarizes the provisions of the bill and their impact: Continue reading →

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Obama Lags House Republicans on Data Transparency

by on November 3, 2012 · 0 comments

It’s time to roll out transparency grades!

This isn’t anything innovative, but part of my strategy for improving government transparency is to give public recognition to the political leaders who get ahead on transparency and public disapprobation to those who fall behind. So I have a Cato Institute report coming out Monday that assesses how well government data is being published. (Oversight data, that is: reflecting deliberations, management, and results.)

I went ahead and previewed it on the Cato blog last night. The upshot? I find that President Obama lags House Republicans in terms of data transparency.

Neither are producing stellar data, but Congress’s edge is made more acute by the strong transparency promises the president made as a campaigner in 2008, which are largely unrealized. My pet peeve is the lack of a machine-readable government organization chart, not even at the agency and bureau level. The House is showing modest success and promising signs with some well structured data at docs.house.gov and good potential at beta.congress.gov.

I hustled to get these grades out before the election, and maybe there are one or two marginal voters who this study might sway. How it might sway them is an open question, and I’ve had some interesting reaction to the release of the study, such as: Is this electioneering? Shouldn’t there be an assessment of Romney on transparency? Continue reading →

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Roosevelt Tried To Abolish the FCC

by on November 2, 2012 · 4 comments

No doubt you are aware that the Communications Act of 1934 eastablished the Federal Communications Commission, which has profoundly affected the broadcast, cable, telecommunications and satellite industries.  You will recall that the legislation was signed into law by President Franklin D. Roosevelt.  What you may not realize is that President Roosevelt made two subsequent attempts to abolish the Federal Communications Commission.

On Jan. 23, 1939, Roosevelt wrote similar letters to Senator Burton K. Wheeler and Congressman Clarence F. Lea urging dramatic FCC reform.

I am thoroughly dissatisfied  with the present legal framework and administrative machinery of the [Federal Communications] Commission.  I have come to the definite conclusion that new legislation is necessary to effectuate a satisfactory reorganization of the Commission.

New legislation is also needed to lay down clear Congressional policies on the substantive side – so clear that the new administrative body will have no difficulty in interpreting or administering them.

I very much hope that your committee will consider the advisability of such new legislation.

Although proposals for FCC reorginization were introduced at the time, Congress did not act.  Then World War II intervened.  It wasn’t until 1996 that Congress “comprehensively” updated the 1934 Act.  But the 104th Congress left the “present legal framework and administrative machinery of the Commission” intact, and it failed to to “lay down clear Congressional policies on the substantive side.”

Roosevelt wanted to transfer the functions of all independent agencies like the FCC to cabinet departments.  A 1937 initiative for this purpose failed.  Two years later, Roosevelt took aim at the FCC directly.

Roosevelt’s specific issues with the FCC of the 1930s are a subject for a subsequent essay (they were primarily on the radio side, although also relevant to the telephone side).  In any event, his 1939 letter reinforces a libertarian critique of the 1934 act.  The law was overly broad and created too much room for the FCC to establish its own  policy preferences instead of serving to enforce the policies of elected congressional representatives and the president.

Althouth well-intentioned, the FCC (even to its most famous creator) was a disapointment and a mistake.  The 113th Congress should carefully consider the 32nd president’s advice.

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LPFM Will Likely Fail Again, Unfortunately

by on November 1, 2012 · 122 comments

“All this top-40s music sounds the same.”  I think we’ve all heard this sentiment.  The nature of regional radio broadcasting almost requires a regression to the mean in musical tastes.  A radio station cannot be all things to all people.  I suspect most people will be surprised to learn that some of the most innovative radio broadcasts are taking place at hundreds of stations across the country—and only few people can listen to them.  These stations, known as low power FM (LPFM), carry niche programming like independent folk rock music, fishing shows, political news, reggae, blues, and religious programming.  (And one station in Sitka, Alaska consists entirely of a live feed of whale sounds.) Continue reading →

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Event: Will the UN Take Over the Internet? Previewing the World Conference on International Telecommunication

by on October 31, 2012 · 2 comments

As you know, Eli Dourado and I have been keeping close tabs on the World Conference on Information Technology (WCIT), which will take place this December in Dubai. We started WCITLeaks.org in June to help bring transparency to the treaty negotiations because U.S. officials and others had warned that some member states, including Russia and China, had put forth proposals to regulate the Internet, and those proposals where not available to the public. Since then, Eli has joined the State Department’s International Telecommunication Advisory Committee and he will be part of the U.S. delegation to the Conference.

Now we’d like to invite you for a final briefing about the conference, looking at what’s at stake and what to expect, on Wednesday, November 14, at 2 p.m. at the W Hotel in Downtown D.C. We will have a keynote address by Ambassador Terry Kramer, head of the U.S. delegation to the conference, as well as a panel discussion including Gary Fowlie from the United Nations, Paul Brigner from the Internet Society, and internet governance expert Milton Mueller.

We hope you will join us for what will no doubt be a lively discussion! Below is the full event information. Please RSVP today.

Please join the Mercatus Center for a panel discussion on the upcoming World Conference on International Telecommunication (WCIT). Once in a generation, governments from around the world gather to revise the International Telecommunication Regulations, a UN-sponsored treaty that governs international telecom practices. This year’s meeting is especially important because it is the first one since widespread adoption of technologies such as the Internet and mobile phones.

In the U.S. there has been widespread concern that the UN may want to exert greater control over the Internet, and the House recently voted unanimously for a resolution opposing any such move. Additionally, there are concerns that the new regulations could require U.S. web companies to pay to deliver content over the Internet.

The panel will preview these and other issues that are likely to arise at the WCIT meeting that begins in Dubai on December 3. The event will also feature a keynote address by Ambassador Terry D. Kramer, the head of the U.S. delegation to the WCIT.

Panel Discussion:

Eli Dourado, Research Fellow, Mercatus Center at George Mason University & co-creator, WCITLeaks.org

Paul Brigner, Regional Director of the North American Bureau, Internet Society

Milton Mueller, Professor, Syracuse University School of Information Studies & co-founder, Internet Governance Project

Gary Fowlie, Head of the Liaison office of the International Telecommunication Union to the United Nations

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