This past December, the United States settled a trade dispute with Canada, Europe, and Japan over the recently enacted Unlawful Internet Gambling Enforcement Act.
The problem is that the law carves out exemptions for some forms of gambling, such as state lotteries and domestic horse racing, while banning most other forms, most notably poker, the most popular form of online wagering.
The most popular online poker sites are all based overseas, where online gambling is legal. This gave rise to the trade dispute between the U.S. and most of the rest of the western world.
The U.S. Trade Office won't release the terms of the settlement—an odd development itself, given that the settlement involves U.S. tax dollars, was negotiated by employees of the U.S. government, and isn't likely to involve any information related to national security. But most experts believe that given the immense popularity of online poker, and the fact that America is home not only to most of the world's poker players but also the wealthiest, the settlement was likely in the tens of billions of dollars.
The U.S. was negotiating from a position of weakness. For the last few years, the tiny island nation of Antigua has been challenging the U.S. online gambling ban in the World Trade Organization. Antigua has won every step of the way.
Last week, just days after the U.S. settlement with Europe, Japan, and Canada, the WTO awarded Antigua $21 million in annual reparations for losses to the Antiguan economy caused by the American ban on Internet gambling. Because tariffs on U.S. goods would hurt the Antiguan economy far more than the U.S. economy, the WTO gave the okay for Antigua to recoup its losses in the form of copyright infringement, essentially making the country a haven for movie, music, and software piracy.
Had the U.S. not settled with the world's economic powerhouses, we might have seen a massive battle unfold between the U.S. entertainment industry and the moral majority types behind the gambling ban.
That doesn't mean the settlement is something to be proud of. On the contrary, it's pretty despicable. It's bad enough that the federal government feels it's proper and appropriate to tell American citizens what they're permitted to do on their own time in their own homes with their own money. But it's also willing to spend tens of billions of dollars of money paid to the government by those same citizens in the form of taxes to ensure it retains that power, and that it's jurisdiction to enforce that power covers the entire globe.
Ah, but it gets worse.
The U.S. could have actually resolved all of this and preserved its precious gambling prohibition by simply making the prohibition uniform. But that wouldn't do. Just as important as the ban on Internet gambling itself were the carve-outs for politically-protected special interest groups—lotteries and horse racing. So the tens of billions the U.S. government is paying to settle the trade dispute is not only to preserve the gambling ban, it's to preserve the congressionally-granted monopoly on online wagering for interests with more political clout than poker players.
There are likely many people whose reaction to all of this is "so what?" It's tough to get too worked up over a ban on something as seemingly niche and targeted as a ban on Internet gambling. Who other than Internet gamblers should care?
Part of the problem is the mentality that comes with this kind of legislation. The gambling ban seems to have been supported by two similar approaches to governance that, although they come from opposite sides of the political spectrum, are generally quite similar.
From the right, many feel that if they're personally morally opposed to a particular consensual activity, it ought to be banned for everyone. From the left, it's the mentality that because some people can't engage in a particular activity responsibly and without harming themselves, that activity ought to be banned for everyone. One is moral paternalism. The other is Nanny State paternalism. But the result is the same. The government makes your decisions for you.
The other reason even non-gamblers ought to be concerned about all of this is that it will be difficult for the government to enforce this ban without giving law enforcement some exceptionally broad powers. Federal authorities can't arrest the owners of gaming sites because they're based offshore, in countries where gambling is legal (unless they're foolish enough to come to the U.S.). The only option, then, is to go after the gamblers themselves. That means deputizing banks, credit card companies, and Internet Service Providers to start monitoring their customers spending and web surfing habits. Because the penalties against these companies for violating the law are likely to be severe and because the law specifically exempts them from liability for over-enforcement, your bank and ISP are likely to err on the side of banning legal transactions and erroneously reporting you to federal authorities than to err on the side of leaving you alone.
You needn't make your living playing Texas Hold 'Em to worry about the effects of the government requiring your bank and ISP to spy on you. If there's any good news in all of this, it's that technology and globalization have made it increasingly difficult for Congress to enforce its own morality on our private behavior.
The bad news is that because of that, the government will continue to seek increasingly broad powers to get its way.
Radley Balko is a senior editor with Reason magazine. He publishes the weblog, TheAgitator.com.