Internet Gambling Could be the Big Issue in 2014

Forget the government shutdown and forget Obamacare - the biggest touchstone issue in the 2014 mid-term elections could be fully legalizing (or prohibiting) placing online bets through gambling websites. Already legal in Delaware and Nevada, New Jersey will become the third and most populous state to allow online gambling next week. However, the man with perhaps the deepest pockets in politics is already organizing for a national ban.

There is nothing like a sluggish economy to make people reconsider the virtues of vice. With nearly every state in the union scrambling to make up for plunging revenues, internet gambling is following in the footsteps of off-track betting and riverboat casinos to lure states toward a once forbidden fruit.

The Garden State – who at one time had a monopoly on gambling east of the Mississippi – has seen its fatted calf slim past svelte in recent years, as neighboring states have either expanded their racetrack operations or welcomed Indian reservation gaming, and full-scale operations in Connecticut have taken a major bite into its northern frontier.

New Jersey has granted online gaming licenses to its Atlantic City casinos, who must use geo-locating technology to make sure that gamers are only playing from within state lines. Participants will also have to set up online accounts and verify their age in order to play.

Over the past decade, the feds have been blurry on what was legal in terms of online wagering. That changed when a 2011 Justice Department opinion on whether using the internet to sell lottery tickets would violate the 1961 Wire Act, basically said that only sports betting would run afoul. Immediately, gambling interests went into a feeding frenzy.

As many as 12 states are said to be considering adding some form of online gambling next year, but just as the momentum is building, some of the billionaires behind the big brick and mortar operations are raising up a fight. Most notably, casino mogul Sheldon Adelson (Las Vegas Sands Corporation, The Venetian) is mounting an expensive campaign to shut it down through federal law.

Adelson, who donated more than $95 million to political causes in 2012, has reportedly begun hiring a PR team and lobbying firms to wage a war against what he sees as a threat to his empire. While Adelson's motivations seem clear, there are some serious questions to be asked.

Critics of online gaming argue that allowing bettors to use a credit card to place wagers from their homes, their laptops and even their cell phones will lead to an onslaught of degenerate gambling and ruinous debt; that it will exploit the poor and break up families. Whether that has merit is of course, hard to say. It's difficult to make an argument that an already available vice will become more destructive simply by making it more accessible or removing the stigma of doing it illegally.

I think the more interesting question is whether or not we're jumping right past the more obvious solution that lies between today's heavy restrictions and the out-and-out free for all that could become of widespread online wagering. Will there be any point in restricting Vegas-style resorts if the same action can be had on your iPhone?

Of course, the big difference is the financial impact of physical casino operations, which create jobs by the hundreds and bring serious revenues to their localities. It seems that expanding such operations, while keeping the lid on online operations would allow for a little more give and take. In other words, if we're going to give gaming corporations access to the golden goose just because our cupboards are bare, we should at least replenish them to the greatest extent possible. I don't gamble, so I don't have a dog in this fight, but I've said many times that it's a vice that has existed almost as long as mankind, and has proven its ability to survive all attempts at prohibition as well any other.

Like all such vices, the best outcomes have usually occurred when they are kept out in the open and sensibly regulated, rather than run by thugs and lawbreakers underground. Casinos are unique among vices in that they tend to support more ancillary business – entertainment, lodging, dining, etc. – than things like drugs, alcohol, prostitution or cigarettes. These might be factors to consider before we go down the road of turning yet another billion-dollar industry into a non-labor-intensive, technology-driven money machine for a few big corporations at the expense of everyone else.