Summary - Online Gambling Policy Forum - Cato Institute
Online Gambling: Lessons
from the Internet and Bookmaking
Policy Forum
Thursday, October 23, 2003
11:45 am (Luncheon to follow)
 Featuring
Rep. Barney Frank (D-Mass.); Koleman Strumpf, UNC Chapel Hill;
Raymond Sauer, Clemson University; and Robin Hanson, George
Mason University.
The Cato Institute
1000 Massachusetts Avenue, NW
Washington, DC 20001
Barney Frank:
Barney Frank has appeared before the Cato
Institute on several previous occasions, all focused on
the Cato-esque idea of less government involvement. So,
no surprise that he takes the anti-prohibition stance with
regards to online gambling.
Interesting quotes from Frank with regards
to online gambling, public perceptions, prohibition, etc:
“People should be free to gamble.”
The present anti-online-gambling bill
is “a fundamentally flawed notion.”
Prohibition of online gambling is a
“massive invasion of privacy for no good reason.”
Frank agrees that gambling can be dangerous,
but also states that “people may buy too many suits
(and) drink too much beer.” So, we don’t see
the government attempting to regulate those behaviors. Frank
makes the distinction that protecting people from forces
over which they have no control is good, but that the government
should have “no energy left for protecting people
from themselves.”
When asked by a reporter from The Las
Vegas Review Journal if he thinks the Kyl bill will pass,
Frank says that it’s highly unlikely this year because
of time constraints. He further states his opinion that
the bill doesn’t stand much of a chance next year
either, considering the obstacles related to exceptions
for the various legal forms of gambling.
While Frank grossly misses the mark with
his notion that fraudulent offshore gaming operators will
be exposed and “gone in an hour” after their
first scam, his ideas that Market Forces should dominate
the industry are right on target.
Raymond Sauer:
Raymond Sauer has conducted extensive
research into the history of gambling regulation in America
from the perspective of both sides of the issue. He insists
that the “battle” between opponents and proponents
of gambling has been going on since Colonial America and
continues to this day because of issues primarily associated
with “revenue potential.”
Historically, Sauer says that accepted
forms of gambling, such as lotteries, have become increasingly
tolerated because increased government spending has created
an environment where the revenue generated from lotteries
makes that form of gambling more palatable in comparison
to raising taxes.
Sauer points out that offshore gaming
is “small potatoes” compared to the overall
gambling industry. However, he feels that the offshore operators
operating “outside the fringe of the law” are
“sitting ducks” for the Kyl-bill-style prohibitionists
and, based on history, he feels certain that offshore gambling
opponents will eventually win.
Robin Hanson:
Robin Hanson has studied gambling from
the aspect of financial markets. His brief argument in favor
of internet sports gambling is based on his notion that
the sports betting market has enormous potential as a “new
financial product.” And, he says, much like the stock
market years ago, new forms of financial speculation have
historically been considered illegal in there genesis.
Koleman Strumpf:
Extensive studies of convicted illegal
bookmakers in Brooklyn form the basis for much of Koleman
Strumpf’s arguments against the prohibition of internet
gambling. While he agrees that offshore gambling accounts
for a very small percentage of the overall market, he seems
to feel that prohibition will have much larger consequences.
One of his basic arguments against prohibition
is a supply-and-demand type of case. There is such a tremendous
demand for sports betting in the United States that there
is almost no likelihood that such a popular activity can
be banned in its entirety. In fact, he argues, prohibition
would create more problems than it would solve, by increasing
the influence of local bookies, the number of bettors playing
on credit, etc.
Strumpf’s case is best summed up
by his notion that there are two basic stances taken towards
gambling – a moral evil versus an individual freedom
… either way, Strumpf says, “government prohibition
is NOT the answer.”
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