Google, Yahoo and Microsoft ante up $31.5 million in fines for promoting online gambling |
If you operate a web-based business in the United States that shows advertising and haven’t gotten the stern message about online gambling ads, you might want to read this post carefully.
Microsoft took the biggest hit from the justice department for promoting online gambling between 1997 and 2007, having to pay $21 million, followed by Yahoo who’s penalty was $7.5 million and finally Google with $3 million.
via ABC News:
“These sums add to the over $40 million in forfeitures and back taxes this office has already recovered in recent years from operators of these remote-control illegal gambling enterprises,” U.S. Attorney Catherine Hanaway said in a statement.
Even cursory Hmm readers already know I think the government is missing a huge opportunity with online gambling, on a fool’s errand going after recreational gambling in people’s homes and that internet gambling will be legalized in the United States at some point in the future. But in the present fellow US citizens, and it disturbs me to write this, it is not a good idea to be putting up internet gambling advertising on your websites or doing any gambling online yourself.
Washington State House Bill 1243
If you live in Washington state where gambling online is a class C felony, you might also be interested in this comment which talks about proposed Washington State House Bill 1243 which seeks:
to quash the felony charge language in last year’s legislation addressing in-home internet gambling.
Being that was back in February 2007, I checked up on the progress of HB 1243 which, if passed, will provide legal defense for those adults who gamble online in their home for “recreational purposes.” The bill further defines (PDF) that as:
… for the defendent’s own enjoyment and not as part of an enterprise that derives income from operating an internet web site that transmits or receives gambling information.
Sadly, it appears that the bill is languishing, still (anybody got an update?) awaiting a hearing in the House Commerce and Labor Committee. How is it that the bill to make this a class C felony got passed in less than six months and the bill to defend what people do for recreation has taken 11 months and gone nowhere? Punish fast, defend slow, ain’t politics grand? Oh, and let’s not forget that shortly after passing this law to punish recreational online gambling, they voted to expand tribal gambling in our state.
Is your state sending mixed message on gambling like Washington state?
The war on our home soil against internet gambling must end. It’s a fruitless battle that should be redirected into legalizing and taxing the proceeds. Let’s use this money to improve our schools, reduce the debt, enhance the roads, bulk up the problem gambling services (remember, there are already legal gambling on indian casinos and state sponsored lotteries). I may not be interested in playing poker online personally, but I don’t believe in preventing other adults from doing so. I can see why the indian reservations and those who stand to lose money (or political support?) from gambling in this state are against this, but don’t see why any reasonable thinking adults are in opposition.
I’m sure somebody will mention the social ills of gambling, let’s put that violin away. We’ve already got legalized gambling here and getting rid of all the advertising for online gambling while leaving the billboards for legal terrestrial gambling isn’t going to help the social problems.
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Not only is the government missing out on tax revenue, but consumers are also missing out on more efficient ways to wager. Historically, gambling has been heavily regulated which has allowed casinos to maintain high spreads on what they charge people for gambling. Instead of trading bets with other players, you have to use the house as an intermediary, where they are allowed to fix prices. This allows the casinos to keep a percentage of what you are gambling, instead of charging you a flat commission because you usually don’t know what their cost basis is on the bet. While most customers don’t notice the spread, it shows up everywhere from the green spaces on the Roulette wheel to the 5 - 10% Vig that they take at the sportsbook.
If you were to compare gaming to investing, then the casinos today works like much of the bond market. Instead of knowing how much you are paying for each wager, you only get to know how good/bad the odds are. Some casinos will be more aggressive and will advertise better rates, but most consumers have trouble understanding how much gambling costs, when they aren’t paying a flat fee for each “trade”
In England (where internet gambling is allowed) it works less like the bond market and more like the stock indexes. Instead of having to pay an unknown spread to the house, you pay a flat commission and are then allowed to buy and sell bets directly to the public. This reduces the risks that the house needs to take and improves the efficiency for gamblers. It also gives gamblers an opportunity to cut losses or take early gains, if the situation around their wager starts to change (i.e. star QB breaks his leg) Unfortunately, by trying to outlaw internet gaming, the Government has created high barriers to entry and are preventing more efficient markets from developing.
Comment by Davis Freeberg — December 20, 2007 @ 9:13 am PST
You just made me think of other issues with terrestrial gambling, Davis, unless one lives in walking/biking distance to a casino: environmental and financial impact of travel to and from the terrestrial casinos. The closest indian casino here is about 25 mile round trip. The closest casino we like the best is over 100 miles round trip.
If people could gamble from home legally, that would cut down some amount of travel-related expense and waste.
Comment by TDavid — December 20, 2007 @ 9:48 am PST
TDavid - I sometimes, well most times, think that our government couldn’t hit their butts with both hands nor see the forest for the trees. Why not legalize gambling in whatever form and take a piece of the pie. I also think that they should legalize other things - but that’s another story. Good thinking about the travel/time impact. If one could gamble at home, wouldn’t that reduce the ‘global warming,’ the wear and tear on your vehicle, etc.?
Comment by Mani — December 20, 2007 @ 10:53 am PST
From what I heard a couple years ago, there was legislation on the books to legalize internet gambling site to locate their host servers in Las Vegas, but I guess it never came to fruition. I’m sure online gambling is a billion dollar business by now, and all that money is going overseas.
Comment by Kevin — December 21, 2007 @ 12:09 am PST