Effects of Internet Gambling

The small island of Antigua left the sugar and banana industry for internet gambling. The states of Utah and Hawaii where gambling is illegal, strongly oppose this new development. Antigua claims that if the U.S. ties to block other countries from offering internet gambling it would be in violation of a 1993 international trade agreement. The World Trade Organization ruled in favor of Antigua. "In trade-speak, Utah's prohibition amounts to the use of a zero-quota on the supply of Internet gambling services, and that's a violation of market access," said Peter Riggs, director of the Forum on Democracy and Trade. This decision will also prohibit states from having exclusive agreements with Indian tribe casinos. Many of the monopolies states hold on state lotteries would be eliminated. Often proceeds from these lotteries are used to supplement state education.
Of course the U.S. cannot negate on a trade agreement, but what effect will this have on the U.S. gambling market.


Drake said...

Gambling is bad. There is nothing good that comes from it. It is addictive, and it assumes that some one can get something for nothing. This kind of behavior is what is eroding our society today. When we all believe that we can get something for nothing then our society will fail. In the mean time get rid of gambling, and lets move on. Regardless of the money that is used to support schools. As far as I'm concerned its dirty money and I'll share no part in it.

Dr. Tufte said...

-1 on Diane's post and Drake's comment for grammatical and spelling errors.

I'll start backwards from Drake's comment. I think it is fine to use moral or ethical positions to highlight what is desirable from an individual standpoint. Unfortunately, this doesn't offer a rich pallette of options for what society ought to do when something undesirable happens anyway.

In that light, both prohibition (with criminal and civil penalties) and legalization (with penalties through excessive taxation) get at the issue of discouraging behavior that society doesn't approve of (with or without reference to individual moral and ethical positions).

This runs into a broad issue about sovereignty, federalism, constitutionality, and the responsibility of governments to abide by international agreements.

Sovereignty is the principle that independent countries can have different laws regarding socially marginal behavior.

Federalism is the idea that countries like the U.S. have different levels of government that bear different responsibilities.

Constitutionality refers to the idea from the 10th Amendment that powers not explicitly granted to the national government or forbidden to state governments reside with the latter.

In this case, sovereignty suggests that Antigua can pretty much do what it wants to (unless we want to go to war over this). Federalism implies that it isn't Utah's job to regulate international commerce. Constitutionality means that the interstate commerce clause places disputes like this in the hands of the national government.

The bottom line of all this is that Antigua can do what it wants, the U.S. ought to abide by the W.T.O ruling, and Utah is out of luck.

It isn't a pretty outcome for people who care about limiting gambling, but it is on very solid legal ground.