Stossel, O’Reilly and legalized US online gambling

Following our post on the looming possibility of a liberalized US online gambling market, we thought we’d post on the below discussion that aired on the O’Reilly Factor.  The opposing views in this debate are nicely canvassed.

O’Reilly takes the firm anti-online gambling stance and pushes that old chestnut…it’s pervasive, addictive  and American adults can’t be trusted to gamble responsibly.  This is the same view espoused by many politicians and State-regulated terrestrial gambling operators pushing for continued prohibition of the online industry.

Stossel take the pro-regulation view…yes online gambling can be addictive.   But so is alcohol.  Alcoholism remains one of America’s biggest killers and an addictive disorder that is unquestionably more devastating to the fabric of American society than gambling.  That doesn’t mean a general prohibition of beer and wine across the US is good policy.  And in any case, prohibitions (certainly where alcohol and gambling are concerned) just do not work.

Libertarianism or Fascism?

Should American adults be trusted to choose whether and to what extent they gamble online, or does the government need to make this choice for them?

While the majority of gamblers are capable of playing responsibly there is without question a minority who are susceptible to addiction.  So the question then becomes, should the responsible majority be prevented by the State from participating in an activity they enjoy to protect the minority?

When it comes to the America’s three deadliest addictive disorders (according to attributed mortality rate) – tobacco, obesity and alcoholism, the government says no.  Americans are free to smoke, eat and drink themselves to death and in the case of alcohol particularly, take others along for the ride with them (over half of all confirmed abuse reports and 75% of child deaths are alcohol related; every 22 minutes in the US someone is killed in an alcohol related road accident).

But does a minority propensity toward alcoholism mean that wine should be illegal?  Because obesity causes 300,000 deaths annually, should hot dogs, potato chips and donuts be outlawed?  And even if they were, would hot dogs, chips and donuts all of a disappear from American culture?  Unlikely…because as history has demonstrated time and time again, prohibitions on very popular pastimes are never successful.

Prohibition problems

O’Reilly: “Some people can drink 2 or 3 beers and they’re not intoxicated some people become alcoholics…that’s why prohibition was put in.”

Stossel: “How well did that work?”

O’Reilly: “It didn’t work”

Stossel: “Do we ban beer?”

O’Reilly: “No”

The above excerpt, in which O’Reilly inadvertently began arguing against himself, touches on the failure of alcohol prohibition back in the1920s and early 30s. Just as this prohibition failed to curb drinking, the Unlawful Internet Gambling Enforcement Act has done little to stop the rate at which Americans gamble online.  According to H2 Gambling Capital, they will wager around $6 billion in 2010 – the same as they did in the year before UIGEA was passed.

UIGEA doesn’t stop Americans gambling online – it simply changes who they are gambling with.

Lawmakers hypocrisy

The player protection argument against online gambling is a perfectly valid one.  However it loses all meaning when it is being used by either connections to terrestrially sanctioned gambling operations, or politicians endorsing those operations.

Some of loudest objectors to online gambling on the grounds of player protection are land based wagering, casino and lottery operations.   How can these people really be concerned about problem gamblers while they rob them blind with games whose return to player rates are substantially south of 90%?

The lottery in Australia returns only 60% of the prize pool back to players.   I suspect the number is similar in other parts of the world.  And lotteries are universally endorsed in most non-Muslim countries.  They are packaged as harmless, passive games that are hardly even gambling. As O’Reilly puts it, “yeah but the lottery’s not like sitting at a table and playing 21 blackjack or roulette”.

In a past life I worked at Australia’s monopoly lottery operator Tattersall’s.  They used to categorize their players according to value (annual lottery spend) and sitting at the top of the list were customers they referred to as ‘high value ritualistics’.  These customers spent AT LEAST $50,000 per year on lottery tickets – some considerably more.  Hard to argue no addiction here.

And then there’s poker machines, or slots; legal in many states across America and growing in number as racinos become more and more popular.   These machines are intentionally manufactured to be addictive and suck money from mesmerized gamblers who are too stupid to realize that for every dollar that they put in they will get less than 90 cents back.  But according to some lawmakers this isn’t as addictive or dangerous as a game of online blackjack or roulette?