Legalize Online Gambling

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The New York Times  reported today that Pokerstars and Full Tilt Poker have come to an agreement with the U.S. government to pay hundreds of millions of dollars for illegal online gambling and fraud. Now, Full Tilt Poker had effectively set up a ponzi scheme, taking money from players and putting it in their pockets. Players saw the money in their accounts and Full Tilt said that they could withdraw it at any time, but it seems that was not the case.

These settlements seem fair since both companies certainly broke the law, but there is a bigger question lurking beneath them: what exactly is the problem with online gambling?

I know opponents of it point to the ease of access and the social problems it could create. But not just do I not think that is a valid reason for banning it, I don’t even think the reason holds up under scrutiny.

Opponents to online gambling are generally the same opponents of gambling in general. They have a strong dislike for it, believing it causes a vast array of social problems including the destruction of family values. This may well be the case, but it is also an extremely paternalistic point of view. Many Americans enjoy gambling and do so responsibly. Ever since the rise of Las Vegas in the early 1930s, gambling has been an accepted, if sometimes looked down upon, part of life.

The question then becomes whether online gambling poses such a greater risk to society than in-person gambling that it should be banned. On this, the answer is unequivocally no: online gambling may in fact pose less of a risk to society than its brick-and-mortar counterpart.

Online gambling could help obsessive gamblers.

Online gambling offers an abundance of options that casinos do not that actually help players control their gambling habits. Players can set time limits for themselves, set money limits for themselves and allow themselves to play only during certain hours. They can take a self-diagnostic test to see if they are a compulsive gambler and receive help if they need it. They can play from a living room with windows and clocks, not a depressing casino void of light. They can drink and eat what they want, not continually sip on free drinks that reduce their inhibitions and open their wallet. All of these things will help prevent excessive, dangerous gambling.

Online gambling also offers a variety of different spending levels. On Pokerstars, for instance, users could play for free with “fake money.” They could also play at 1 cent/2 cent tables. For a person who wants to have a bit of fun and not worry about losing a huge sum of money, this is perfect. Regular casinos certainly do not have tables for that low an amount, but they also don’t have 25 cent/50 cent tables as well. At most casinos, they cheapest you’ll be able to play for is $1, generally higher. Players have no choice but to bring $50, $100 or even more to the table. Online gambling offers these players a vast array of other options.

But, will online gamblers take advantage of these options? The academic literature says yes. A 2009 study in Sweden found that 56 percent of players used spending limits, 40 percent had taken a self-diagnostic test and 17 percent had used a self-exclusion feature. These online features offered users greater control over their gambling habits.

Certainly,  online gambling offers gambling addicts even easier access to a table, but for those with a large gambling addiction, most live near a casino anyways and online gambling is not going to change much for them. At the margins, it could certainly change some entertainment gamblers into addicted ones, but is that really a good enough reason to ban the entire thing? Legal online gambling would provide a fun, easy avenue of recreation for millions of users. Many will lose a bit of money but if they enjoy playing, it will be a good use of money; they are effectively paying for entertainment. And if they make money, even better!

So, I’m waiting for a better reason for why online gambling should be banned. Certainly, online gambling would need to be well regulated. Such a system would prevent companies from running ponzi-schemes or stealing their users’ money. When I played on Pokerstars, I always was  bit considered at their algorithm for dealing cards was rigged so that players received better hands, increased the pot and Pokerstars took a bigger cut. That certainly could have been my frustration at losing morphing into a belief that the game was rigged. But I was never convinced those beliefs were entirely unfounded. A regulated system would ensure that these online games were identical to games in Casinos, offer entertainment for millions of users and provide valuable tools for obsessive gamblers to control their addiction.

Can’t we just legalize it already?


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