Is Online Gambling Prohibition Actually Protectionism?

October 17th, 2012  :  Written by Patriot #1

Pink Floyd : The WallPink Floyd : The Wall

Prior to the signing of the Unlawful Internet Gambling Enforcement Act [UIGE], Business Week published an article addressing the point of prohibition vs. protectionism. We highlighted this point in a release we sent to the media last week, and the protectionism angle has certainly picked up some steam.

While the proponents behind the bill [Rep’s Frist, Goodlatte, Leach & Kyl] have argued their motivation was based on eroding American morals and values caused by online gambling – the bill that passed only affected the methods of transaction. The bill did not make online gambling illegal.

The response by the major public gaming operators of pulling out of the US market was about protecting long-term shareholder value and avoiding arrest if entering the United States, not an explicit law against online gambling. The cases of BETOnSports CEO David Carruthers and Sportingbet’s non-executive Chairman Peter Dicks put the fear into international gaming exec’s and certainly altered their travel plans.

The case is made, by ourselves and others including Business Week, that beyond the obvious pre-election “playing to the base” impact of the new law, that the door is still open to US-based gaming companies such as Harrah’s, MGM Mirage, Wynn and Trump to launch online gaming sites. The argument that we’ve read on many sites focuses on the fact that the taxation available to the US government from online gaming is just too great to outright ban or ignore. $6 billion dollars in online gaming revenue last year in the US alone? A few lobbying dollars will be spent to grab that booty.

So we’re wondering: if this is a protectionist move, and online gaming will be licensed and regulated inside the US in the future, is the new law the most effective move by the government? Is closing the market to outside competitors an intelligent free-market play? What if other countries block US companies from competing in their markets? Does the world need more walls?

We’d like to hear everyone’s thoughts – write a comment and voice your opinion.

You can read the Business Week article here.

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