Policing Online Gambling — Why It is a Losing Bet

It was revealed today that a former money launderer for online casinos, Daniel Tzvetkoff, turned states evidence to avoid jail time and rat out 3 of the largest online poker sites.  Five domains were seized including Full Tilt Poker, Poker Stars and Absolute Poker.  75 bank accounts were frozen as part of the arrests that include money laundering, bank fraud and online gambling.

The arrests and seizures are all thanks to a law passed in October of 2006 on the safety of our Ports, but was based off of a bill from July 2006:

To prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling, and for other purposes.

The Obama administration as well as many states have recently talked about repealing the law or enacting laws to work around this Federal Law.  I, in now way, condone what these companies or folks did.  Laundering money and committing bank fraud is definitely illegal, but the environment created in 2006 with this controversial law created a situation where they had no little choice.

Putting aside the law for second and whether it is right or wrong, having the FBI or other government offices policing the internet is always going to be a losing bet if the law they are enforcing is legal in other countries.  Almost every other country allows online gambling, so the US is left to threaten US credit card companies and banks for prosecution for depositing customer money into these accounts.  Offshore gambling sites have gotten smart in how to deal with this and everyone has stayed one step ahead of the Federal Investigators.

I heard one person compare this to illegal file sharing and the policing of sites that post copyright material.  This is not like that at all.

First, the world has judged for the most part that illegally posting copyrighted material is wrong, so jurisdictions are enforcing that law equally across the world.  Second, online gambling is something a user opts into fully understanding the risks, while uploading, hosting or downloading files illegally you are trading someone else’s work.  Its comparing missiles to apples.

So back to the law, why was it enacted and passed?  The actual law was an amendment that was attached to a bill related to the safety of our Ports the day before Congress adjourned before the 2006 elections.  There was no way the SAFE Ports Act was going to fail to pass, as what Congressmen or Senator would not pass a law protecting our country right before voters decide their fates.

Ugh…what a mess.  The best thing we can do as a country is repeal the law.  As a country we have legalized so many other forms of gambling, starting with lotteries, then slots, river boats and now card/table games all in the name of supplementing state coffers.  The next logical step in these times of government fiscal irresponsibility is to repeal the law and stop policing what can’t be policed.