Dispatches from the Culture Wars

As for the idiotic claim that this "federalizes the whole issue", that is exactly what last fall's bill did, made it illegal nationwide to transfer money to online gambling sites through banks and other means. Funny, I don't recall hearing McCluskey's federalism complaints then; I guess it wasn't politically expedient then either. But the sophistry and demagoguery doesn't stop there.

McClusky has other reservations as well about lifting the ban approved last year. "When you're talking about Internet gambling, it's this huge, over a hundred-billion-dollar industry," he relates. "And a lot of the money, we don't know where it goes; it's untraceable." In addition, says McClusky, that money would be impossible to tax -- "as Barney Frank would like to do," he points out.

Gosh Mr. McCluskey, why don't you explain why all that money is untraceable currently; it's because it's not licensed in the US and there is no regulatory regime in place to allow it to be traced. Legalize it and regulate it and then it all becomes traceable. And where in the world does this halfwit get the idea that it would be impossible to tax? Other nations manage to tax such revenues, why would it be impossible for us to do? In fact, it's quite easy.

In order to be licensed in the US, the company has to agree to pay a certain percentage of its profits (that is, their rake or vig) in taxes. As it stands now, tens of millions of Americans are gambling online (it's not actually illegal to gamble online, it's only illegal to transfer money from banks, which is relatively easy to get around; since the bill was passed last year, those poker sites still taking American customers have seen their business jump an average of about 40%) but none of the profits that play generates are taxed in the US. Antigua, Canada, Great Britain, Gibraltar, Costa Rica - they all get tax benefits from sites located there, but the US doesn't.

According to McClusky, several federal agencies -- the FBI, the Department of Justice, and the Government Accountability Office among them -- offer a different perspective. Those entities, he says, believe that much of the money from Internet gambling "is going into money laundering and covering up drug smuggling and even terrorist activities."

And guess what? We have no way of finding out as long as such sites are illegal here. But if you license them and regulate them, you can force them to open the books and track such things. If someone is laundering money through an online gambling site, it is transparently obvious that we have a much better chance of finding out about it if we have access to the books to see who is winning and losing, and to whom, than if those sites operate in an unlicensed manner on a Caribbean island we don't regulate.

If we were to begin licensing and regulating online gambling sites, they will run like hell to get licensed first. Being able to advertise that their site is US-based and therefore regulated by the US and under the jurisdiction of US courts will be a huge benefit to the gambling sites and they know it. It will generate billions in revenue, and it will protect the interests of Americans who gamble online. It will also allow for transparency, requiring the sites to open their books so we can see where the money is coming from and going to.

The FRC spokesman says he believes the main reason Frank is pushing for the legalization of online gaming is because the industry is "a big cash cow" for the Democratic Party.