Internet Gambling Ban: A Federal Power Grab on the States, and the Internet

Earmarks, Obamacare, telecommunications, and taxation are just a few issues that the Taxpayers Protection Alliance (TPA) deals with that are multi-layered and have an impact on many levels and affect many individuals. Internet gambling is another issue that has a multi-faceted impact; it affects consumers, taxpayers, states’ rights, the economy, and Internet commerce. TPA is concerned that any move to restrict Internet gambling at the federal level would be a detriment to states who may want to allow online gambling; and there is also the real possibility that any action taken at the federal level on this issue could lay the groundwork for increased regulatory power by the federal government, specifically regulations targeting the Internet.

Now, a Nevada coalition of gambling companies are pushing for legislation that aims to “fix” the 1961 law and a new draft bill has surfaced online that may be the outline for a larger House bill on internet gambling coming soon. This legislation does contain carve-outs, and that could portend specific cases of special treatment to certain industry groups that may otherwise be impacted by an overall internet gambling ban.

Senate Majority Leader Harry Reid (D-Nev.) is the key player at the federal level in this battle. Senator Reid is one of the most powerful people in Washington, and he represents a state that is ground zero for legalized gambling in the nation. He is no stranger to using his power to ensure that his state gets special treatment so long as it fits his interests and agenda. It’s not a coincidence that the same Senator who secured a $1, 117,125 earmark to study ‘Mormon Crickets’ may be looking for ways to pass a law that would ensure his state’s supremacy in the gambling industry.

TPA is troubled for several reasons. First and foremost internet gambling is a states’ rights issue and should be left to the states.  TPA has done quite a bit of work in the past on state-based issues dealing with tax increases and wasteful spending. In fact, last year, TPA highlighted several tax increases that went into effect at the state level during the summer.  TPA also looked at some of the waste, fraud, and abuse that occurred in specific states like Tennessee and Louisiana on programs that amounted to nothing more than a shakedown for wasteful and useless services.

Another troubling aspect of this issue is the potential for the federal government to use this piece of legislation to impose regulations on the Internet. Attempts to prohibit all forms of online gambling could be exactly what those who want to regulate the Internet need in order to make that goal a reality. Legislation effectively putting a control on what states can or can not do regarding Internet commerce is exactly the example an agency like the Federal Communications Commission (FCC) could use as justification for Internet regulation. TPA has been a vocal opponent of Net Neutrality and the recent ruling in Verizon vs. FCC was a welcome surprise in certain aspects of the court’s findings halting Net Neutrality, but the FCC is still determined to find ways around the ruling and implement regulations on the Internet and this provide a way for that to happen.

Internet gambling is going to be a key issue over the next several months as voices are speaking up on this debate. Unlikely alliances have been formed and there is no doubt that more will arise as the issue continues to emerge. Any attempt to prevent states from making their own decision on this issue, and using federal law as a means to regulate the Internet, is something that TPA will call out for what it is, an unneeded and unwise federal power grab.