Congressional panel explores legalizing online gambling

Dec 4, 2009 7:10 PM
by GT Staff | The House Financial Services Committee on Thursday conducted a hearing on Internet gambling, which included a number of expert witnesses generally friendly toward legalizing online gambling.

Testimony also included a new study from Harvard University, which indicated that U.S. regulation of Internet gambling would be the most effective way to protect consumers, particularly children and problem gamblers.

The Committee’s chairman, Barney Frank, has been an advocate of legalizing online gambling, and he’s introduced legislation that would regulate Internet gambling rather than banning it entirely.

A 2006 law banned Internet gambling and also barred financial institutions from accepting payments from credit cards, checks or electronic fund transfers to settle online gambling bets. That law, which was scheduled to go into effect on Dec. 1, was postponed for six months to allow regulators and financial institutions time to further study how to implement it.

Many of the witnesses yesterday testified that the best way to control Internet gambling is to legalize it, which will allow officials to license, regulate and tax online gaming.

"If online gambling sites are regulated and licensed, we know who they are," said Parry Aftab of the Web safety group WiredSafety.

But Financial Services ranking member Spencer Bachus, who opposes Frank’s legislation, said the tax benefits from legalizing online gambling would be undermined by the potential harm to the nation’s youth.

Noting that online gaming will still occur whether it’s legal or not, Aftab said bringing sites under legal scrutiny and encouraging education and parental control provide better approaches to the problem.

Witnesses also discussed the best regulatory regimes to follow if the United States were to enact legislation legalizing Internet gambling. Keith Whyte of the National Council on Problem Gambling, said Britain might offer one model. It has had an Internet gambling regulatory regime in place for several years, adding that addiction rates have not changed significantly there, he said.

The 90-minute hearing ended, as is typical in Washington, D.C., with no action taken, with Chairman Frank noting the Committee would resume discussion on Internet gambling next year.

So far, there’s been no markup of Frank’s bill to legalize and regulate Internet gambling.