Las Vegas Review-Journal: Prohibition not the right answer for online gaming

February 23, 2014

By David G. Schwartz
02/23/14, 12:02 AM

The nation faces a dangerously seductive form of gambling, as cross-border, high tech telecommunications networks threaten to siphon money out of homes across the country. The problem is getting worse, and the states, with the constitutional mandate to regulate gambling within their borders, are indifferent or worse. The only solution is for Congress to act now.

It took years, but Congress eventually did — in 1907.

Sen. Elmer Burkett first introduced a measure to outlaw the transmission of gambling information by telegraph across state lines via the race wire, opening debate on the first generation of remote gambling.

Today, the race wire is almost forgotten, but from the late 19th century to just past the middle of the 20th, it was arguably the most pervasive and lucrative form of gambling in America. Before radio, let alone television, the race wire was the nation’s first remote entertainment. Local “poolroom” proprietors, for a fee, could access telegraph lines across which horseracing odds and action were broadcast. A poolroom accepted bets on races being run across the continent (the network extended to Mexico and Canada). Betting no longer required the investment of a trip to the racetrack; workmen and office boys, even middle-class women out for a day’s spree, could stop and place a bet as casually as buying lunch. This was disquieting stuff for those who wanted to use government to stifle the public’s desire to gamble.

Burkett’s bill failed, but opponents of remote gambling kept at it. In 1910, merged with a bill that would ban the interstate transmission of pictures or descriptions of prizefights, a race information ban was referred to the House Commerce Committee, which heard testimony pro and con before deciding that a such a prohibition would be difficult to enforce and would likely have little effect. Even if the poolrooms closed, gamblers would simply head elsewhere.

Following that legislative dud, the race wire remained a troubling fact of American life, ostensibly illegal but wildly popular. Gangland rivalries over control of the wire escalated into what today might be called a domestic insurgency, as waves of bombing and murder provided a prelude to the lawless Prohibition years. During the 1940s, a paroxysm of wire violence cost more lives including, some think, that of famed gangster Benjamin “Bugsy” Siegel.

But Americans kept betting in poolrooms. The thrill of chancing two dollars on an underdog racing hundreds of miles away and winning or losing immediately outweighed the seeming abstractions of organized crime and corruption. It is difficult to overstate the popularity of poolrooms, or the pall they cast on American cities with the corruption of police, judges, and politicians. When the Kefauver Committee met in 1950 and 1951, its chief target was the race wire. Robert Kennedy’s 1961 anti-mob legislative package hinged on the Wire Act, which finally criminalized the race wire (and has been used since to prosecute online gaming).

But over the ensuing decade, the Wire Act didn’t break the power of organized crime or stop people from gambling. Some began to see beyond prohibition. New York authorized off-track betting — legal wire rooms that took bets on Empire State races — in 1970. With trackside wagers declining (along with tax receipts), states began to see the merits of the wire. In 1978, the Interstate Horseracing Act permitted cross-border betting in state-sanctioned facilities, also known as simulcasting, which is today a bulwark of the racing industry nationwide.

So today’s world of remote poker and casino gambling via the Internet isn’t as brave or new as we think.

What lessons does the past offer? The hundred years’ war against the wire didn’t stop play. Those vulnerable to gambling problems didn’t get help. Gangsters fueled urban corruption. Tracks (and governments) lost money. Above all, it was profoundly difficult to uncouple gambling and technology; people like to gamble, and they like convenience.

Still, potential problems can be mitigated. Those who are fearful of a future where gambling is accessible on a phone might, instead of arguing for prohibition, focus on responsible gambling efforts so that problem gamblers struggling with traditional or new ways to bet can have better support.

Removing one way to gamble won’t do problem gamblers much good; improving problem gambling education, detection, and recovery programs very well might.

A century ago, when all but two states prohibited gambling, a federal ban on remote gambling got a poor reception. Today, when forty-eight states and the District of Columbia allow it, the case for federal action is even more dubious. By acknowledging that remote gambling is better handled through careful regulation and control, we can avoid the grind of prohibitory efforts that, history suggests, will ultimately crumble.

David G. Schwartz is the director of the Center for Gaming Research at the University of Nevada, Las Vegas.