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Source link: http://archive.mises.org/5808/congress-forces-gambling-off-line-why/

Congress Forces Gambling Off Line. Why?

October 26, 2006 by

Congress purported to act to protect the values of the American people when it passed the “Unlawful Internet Gambling Enforcement Act.” The result has been a serious blow to a growing industry. Whose values was Congress protecting? It had nothing to do with the American people at large. Congress was protecting the “values” of casino owners and those who work in the state lottery racket. FULL ARTICLE


jeffrey October 26, 2006 at 8:55 am
JK October 26, 2006 at 9:22 am

The thing that sticks out the most to me about this story is numerous online gambling companies losing as much as half of their stock value in one day as a result of the legislation; it reminds me of the rule of thumb that the public sector is always held to a much, much lower standard by the media and public than the private sector. With all of the furor in the past few years over Enron, Tyco, WorldCom, and even Martha Stewart, etc. all supposedly losing money for investors, where is the outrage over this?

Christoffer Lange October 26, 2006 at 10:14 am

Hmmm, how about using e-gold.com as a workaround? You won’t use your credit card to transfer directly to the casino, instead you transfer from credut card to e-gold and then to the casino.

TDL October 26, 2006 at 10:21 am

Reason.com had an interesting write up about the ban where the say that the language is rather broad and ambiguous. In fairness to most casinos, they were opposed to the intervention. Of course the lotteries and race tracks were for it. I’m glad to see that the government is going out of its way to enrich mob linked bookies.

OldRightGeorge October 26, 2006 at 10:23 am

If you are so inclined, please vote for this article at reddit.com here: http://reddit.com/info/ny5p/comments

Etownie October 26, 2006 at 10:27 am

Here in Edmonton, Alberta (adjacent to the booming oil patch), we have the highest number of casinos per capital out of all Canadian cities. So they had some stupid thing about it on TV yesterday (GlobalTV news), blathering on about ‘social costs’ vs. the economic benifits… and they had the minister of gaming (?) on, who said (and I literally had to curse out load at the TV over this) that they are monitoring the situation to make sure that the gambling market in Edmonton is served but not overserved. OVERSERVED!!! Who the $*#%^@$! are they to be deciding that… when and if it’s ‘overserved’ the excess casinos go bankrupt (starting with the worst), and then it’s not ‘overserved’ anymore. And don’t you think the casinos themselves would figure that out before investing millions in building the things.

Dr. Mark Thornton October 26, 2006 at 10:36 am

I’d love to hear that egold worked with these online casinos. Wouldn’t it be great if we “backed into” a gold standard system as a result of a stupid government prohibition on gaming?

billwald October 26, 2006 at 10:49 am

Why? Possibly because Congress can’t extract bribes from web sites or the wrong MAFIA family is getting the profits.

RogerM October 26, 2006 at 10:51 am

E-Gold is a great idea. Also, like online futures trading companies, they could ask gamblers to send a $5,000 deposit by check and earn interest on the money carried over day to day.

billwald October 26, 2006 at 10:53 am

“Wouldn’t it be great if we “backed into” a gold standard system . . . ?”

No, it would be terrible. You want to revert to the bad old days when half the population lived in poverty? Why do libertarians think the will be in the top half of the economic scale? We never were when we were on the gold standard.

Dr. Mark Thornton October 26, 2006 at 10:53 am

Right on Bill. Follow the money!

johnjohn October 26, 2006 at 10:56 am

While it is true that online casinos have lower costs and a higher payout rate than state lotteries, your statement about state lotteries is wilfully misleading. “State lotteries target low income groups and have a payout rate less than 50 percent.” In fact, state lottery player demographics match the general population almost exactly. And payout rates are low because they are set by the state legislatures to ensure proceeds go to community causes rather than private interests and organized crime.

Dr. Mark Thornton October 26, 2006 at 11:35 am

Two responses on lotteries and gold standard

Lottery playing might match the general population but the targeting is low income areas and they play with a much larger percent of their budgets than high income groups.

America became the world economic leader on the gold standard with the highest standard of living. Libertarians in fact come from middle and upper income and education classes at present, but the gold standard would also greatly help low income and laboring classes.

Yancey Ward October 26, 2006 at 12:10 pm

I don’t know who to credit for it, but someone once said that state lotteries are taxes on stupidity. Too true.

Zach October 26, 2006 at 12:40 pm


Consider putting up a reddit button instead of .

Zach October 26, 2006 at 12:41 pm

instead of Digg.

Mike D. October 26, 2006 at 12:53 pm


“A lottery is a taxation,
Upon all the fools in Creation;
And Heav’n be prais’d,
It is easily rais’d,
Credulity’s always in fashion;
For, folly’s a fund,
Will never lose ground,
While fools are so rife in the Nation.”

A song from “The Lottery”, a farce by

Henry Fielding (1707-54)

first performed 1 January 1732
Drury Lane Theatre, London

Yancey Ward October 26, 2006 at 1:37 pm

Mike D.,

I never realized the origin was so ancient.:~)

LAX October 26, 2006 at 2:39 pm

I support congress, Casinos were located out of US, so money flow was out of country.

Pellinore October 26, 2006 at 4:34 pm

Lottery demographics vary broadly by location. Data compiled by Texas Tech ( target=”blank”>here) indicates that it is indeed the poor and uneducated who fund the bulk of that state’s lotto. New York information suggests otherwise, but closer analysis of the data shows that areas with high tourist concentration, and typically higher local education and wealth levels, skew the results (here.)

As far as the proceeds of lottery going to "community causes" this is hardly a measure of whether or not the cause is actually worthwile. The funds would almost certainly be better off going to dreaded private interests, and if they were going to private interests the community cause types would never tolerate a 50% house hold, so more people would benefit from the lottery.


Kevin October 26, 2006 at 4:51 pm


Dollars were being exported, entertainment was being imported. What are they going to do with the dollars?

And it is not up to YOU or congress who I should get my gambling fun from. Who’s back gets sore after a long day’s work? Mine. My work – my choice. The minute you start doing ALL the work for the entire economy is when you can make all the decisions for the rest of us.

johnjohn October 26, 2006 at 5:56 pm

Thank you Pellinore for the comment on lottery demographics – hopefully the subject of a longer exchange elsewhere.
But your argument about community causes is totally flaky. You say “the community cause types would never tolerate a 50% house hold, so more people would benefit from the lottery.” What ever do you mean?

Jack the Ripper October 26, 2006 at 6:05 pm

Great article! It is unendingly amazing that the state has the ability to determine exactly why people engage in any activity. Furthermore, how is it that the state, based on these false assumptions, knows exactly what is “healthy” or “unhealthy” for an individual?

Of course they will use the extreme examples to make their case. They’ll tell you about the mother of five who dropped $100,000 at the virtual slots and is now living off of welfare. But the fact of the matter is that most excesses kill and they can be found in any market.

Despite all this nonsense, I remain optimistic. You can still gamble without too much difficulty. Get a money order from the bank and send it on in!

Anyway, it’s time for my appointment with the local liquor dealer. It’s going to be a fun night at the dorm!

Anonymous Coward October 26, 2006 at 9:16 pm

Hmmm, how about using e-gold.com as a workaround? You won’t use your credit card to transfer directly to the casino, instead you transfer from credut card to e-gold and then to the casino.

Indeed: http://4861766.thegoldcasino.com/

Michael Robb October 27, 2006 at 11:35 am

The popularity of digital gold can only be even further advanced by this latest stunt. Guess how much more campaign contributions will go unreported to numbered bank accounts in other lands? People all around the world are within almost easy reach of making everyday use of these gold transaction payment mechanism. How? With their cellphones, and with cash card loaded with milligrams of gold.

The technology is here. As most new products that involve some departure from the previous art, this one will take some education and a lot of patience in the beginning. But we have already seen the beginning. All we are waiting for now is for the vendor community to wake up and give the gold clientele some attention and some extensive list of needed products to purchase.

It won’t be long. Instantaneous electronic payment transaction services of a secure, private, gold vault meets the conditions of a sound money. For the past several years those who have voluntarily begun using digital gold, have seen a large increase in the purchasing power of their coin. This is what you would expect to happen and to continue, since the quantity of gold is largely fixed; thus the huge increases in demand by the public has had its effect. In the longer term the increase in purchasing power of this money should be driven by production, and there is no reason why the rates of increase should not be comparable.

RJ Barnett October 27, 2006 at 1:27 pm

Again, Free Market view encounters same road moral roadblock that most Libertarians struggle to comprehend. Have certain activities not been recognized as so destructive to public morals that reasonable prohibitions may be enacted?

How many support internet pornography, be it kiddie porn or “adult” exploitation?
Why not allow homosexuals to marry, adopt kids, etc? The Constitution envisions the well-being of our posterity– future generations.

We Lib’s have tripped ourselves with extreme trust in the intellect of fallible, dare I say Fallen man.

If gambling is so desireable, force it back out in the light where some regulation by the state’s may keep it in check.

Adding E-casino’s to fuel the already out-of-control digital money growth (credit cards) is a recipe for national catastrophe. Who doubts that mountains of credit card debt is draining a population bent on rampant materialism? (I’m a former gambler who would likely have destroyed his family through this easy access.)

UPSIDE: maybe this could lead to a gold-based mechanism, a standard of sorts– at least people wouldn’t be gambling there future paychecks.

Kevin October 27, 2006 at 2:29 pm


It would be one thing if prohibition provided the benefits promised, or even if it could be proven that the benefits outweighed the costs.

Even if those conditions were met, would you still feel justified when violating others’ rightful liberty to bring others up to your morality or achieve “social good?”

Kevin October 27, 2006 at 2:37 pm

William Roper: So, now you give the Devil the benefit of law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I’d cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!

- A Man for All Seasons (1966)

Peter October 27, 2006 at 6:52 pm

All we are waiting for now is for the vendor community to wake up and give the gold clientele some attention and some extensive list of needed products to purchase.

Go to http://www.bestgoldcard.com and get a debit card you can fund with e-gold or 1mdc in about 3 seconds and use anywhere in the world, today; you really don’t need to wait for anything.

RJBarnett October 27, 2006 at 9:05 pm

If chasing down the devil was my objective in this discussion, it wouldn’t involve the law.

Maybe, you’re saying no harm is done by credit card gambling. Or greater harm by restricting it through fed gov’t? Either way, thought and action would be better spent abolishing the IRS.

Kevin October 27, 2006 at 10:00 pm


I meant that I fear a net loss of liberty.

Regarding the IRS, I wonder who would cross the tax line first:
1) The IRS, raising the taxes too high, or
2)The Federal Reserve, debasing the currency to such an extent that revenues collected by the IRS are worth less than the cost of collection.


All the fees from getting the money from your bank to getting the money in a gold account with a debit card seem rather steep at this point. But I’m keeping an eye on it.

Pellinore October 31, 2006 at 2:11 pm


Thank you Pellinore for the comment on lottery demographics – hopefully the subject of a longer exchange elsewhere.
But your argument about community causes is totally flaky. You say “the community cause types would never tolerate a 50% house hold, so more people would benefit from the lottery.” What ever do you mean?

I was trying to be brief but unfortunately left the point poorly-expressed in the process. There are a few points I was trying to make:

1) "Community causes" may or may not actually be worthwhile, or even desired by the nominal beneficiaries in the community (I say "nominal" because few people benefit from public works of any type or scale more than politicians.)

2) Whether or not a community cause is actually preferable to private interests benefiting is highly debateable. Indeed, private interests no doubt benefit from community causes in many cases.

3) If the lotto was 100% private controlled, the sort of people who tend to agitate for community causes would never tolerate private interests taking 50% of the money generate by the lottery –for evidence, see any currently private gambling operation and compare its "hold" to that of the state lotteries. So there would be significantly more prize money circulating, thus making the lottery in theory more enjoyable and potentially profitable to those who play it.

Note of course that 3) is merely speculation and does not effect the community vs. private issue.


Michael Robb November 1, 2006 at 8:42 am

The Best GOld Card seems to have a number of separate features all rolled into one product. For example the list of available ATM for obtaining cash might be expanded over what a credit card allows. Why would you want cash? Some people use cash for things at times.

The idea of a debit card is always nice to think about. You do not stand to lose accounting and exchange fees on transactions in other countries. But your wealth is reduced immediately upon purchase instead of up to a month later with a credit card kept current. What else?

Oh yes, the privacy. I like the idea the card does not have my name on it. As long as it clears the little verifying machine swipe with OK the store would be satisfied, wouldn’t they? How about in other countries? Would they refuse it even though it would pass the swipe test. Some places are perverse.

What about online purchases? All the forms are designed for credit cards and require name, address and phone. How about that?

I don’t object to a debit card for $ 89 and may buy one or more and load a bit for Christmas gifts. But there is no reason to ignore the bottom end of the market for e-transaction payment mechanisms. For each cellphone in the world there could be a new mini card reader. Local exchangers could offer ominbus accounts for members in the neighborhood, and sell cash cards to the rest. Hardly any transaction would be too small or too remote to come under e-gold at that point, — worldwide. Will a move into fractional milligrams of gold at this wide an extent cause the gold price to rise in fiat? We have been told No. Nothing can be determined to cause price changes in gold. But, the offers could be hiked if sellers thought about supplying these folks, it seems to me.

Rodger November 21, 2006 at 11:46 am

That law was not about protecting family values or to help state lotteries or even the big contributing legal gambling companies. It is all about “Show me the money”. Government is pissed that they did not find a way to tax the internet. When Al Gore said he invented the internet, it had a bit of truth. He allowed it to thrive becuase he missed an oppurtunity to tax it. This anti-internet legilation has now gotten people and those off shore companies offering gambling and poker saying it (internet gambling) would be alright if it were taxed. The govenment has taken the position that these companies owe taxes to the United States. This is a way to curb their business. Expect some form of future legislation proposing such taxes on internet transactions in exchange for certain privileges. After all the government needs to look after us for our own good. They cannot stop it, so why not tax it.

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