Online gambling is a controversial subject. At the online gambling’s industry’s latest Gigse Totally Gaming event in San Francisco, three former politicians weighed in on the best and worst parts of the business. One of the trio, former San Francisco mayor Willie Brown, provoked quite a bit of controversy.
Brown (a Democrat) opposes Internet gambling at the moment, though he noted in an opening debate that he’d flip-flopped on the issue multiple times in the 15 years he served as Speaker of the California State Assembly. But now that he has retired, he is speaking out against online gambling, which is legal in five countries in Europe as well as the states of Delaware, Nevada, and New Jersey.
“Internet gambling is not capable of being regulated in the way that it needs to be to avoid the incredible damage to the social network” of gamblers and their friends, he said.
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Brown mirrored the arguments made by Sheldon Adelson, the billionaire casino operator, who says online gambling would be too hard to control (and, yes, it would hurt his land-based casinos). Brown’s arguments show that the online gambling industry, which is seeking greater legitimacy throughout the world and has the force of technological development behind it, still faces opposition. The debate among the politicians was interesting because it showed the views of people outside of the industry.
You can’t, for instance, verify the identity of online gamblers in a way that is reliable, Brown said. That’s particularly problematic in an age when children have the skills of computer hackers, Brown said.
“Internet gambling would afford the opportunity for minors to engage in [gambling], violating all of the rules,” Brown said.
Brown said he willingly went to Nevada to gamble recently and enjoyed the trip, but he appreciated that the gambling was managed there by professionals.
“What effect will Internet gambling have on that collection of people?” he asked. “Studies show that people engage in Internet gambling singlehandedly, and they don’t require the assistance of any people to help them.”
That would reduce employment in states with brick-and-mortar casinos, Brown said. He also raised the prospect that criminals would launder money in Internet gambling. And while physical gambling can be properly regulated, Brown said that it is a lot harder to keep control of money flowing through the web. He said that Internet gambling should be regulated on the federal level, addressing a number of these critical issues.
Former Nevada Gov. Bob Miller, a Democrat who held that position from 1989-1999 and who moderated the debate, said, “I do appreciate your philosophical flexibility.”
Some of those arguments that Brown asserted had the audience reeling.
“I can’t say that I agree with a single thing that he said,” said one veteran of the industry.
Miller himself entered into the debate, noting that lots of Americans are engaged in illegal Internet gambling. Authorities are regularly busting such criminal rings, he said. He noted that laundering on the Internet can be traced, while money launderers, according to the FBI, prefer to do their deeds in person and with cash.
Brown replied that casino operators are so focused on monitoring money laundering that they are able to deal with it. Advocates of online gambling say that regulated online gambling can much more easily stop money laundering than illegal online gambling.
William Volk, chief creative officer of real-money mobile gambling startup PlayScreen, said he couldn’t reconcile Brown’s claims with the fact that U.K. regulators are able to use Internet technology to determine whether or not the people who are playing mobile online gambling games in the U.K. are eligible to play or not. Every day, the U.K. regulators are approving transactions where gamblers have to provide proof of their identity and their ability to pay.
Meanwhile, Brown’s opponent in the debate, former Pennsylvania Gov. Edward Rendell (a Democrat who was in office from 2003 to 2011), disputed Brown’s assessment of the damage. He didn’t deny that some people would get addicted to online gambling. But he argued that the state should collect tax revenues that could be used as a resource to address the problems of addicts. By comparison, when Pennsylvanians were leaving the state to gamble, the governor said, they would bring back the problems of gambling to his state but leave about $4 billion in losses in other states where it was legal.
“Gambling exists,” Rendell said. “Pennsylvania should have its share. If there’s a downside, we should get the upside to counteract it.”
Rendell also said that you can deal with underage gamblers who steal their parents’ credit cards. Those parents, he said, will discover the gambling and “be the best regulators of all.”
After legalizing gambling, Pennsylvania now has the second-highest gambling revenues in the country, Rendell said. That has created 20,000 direct jobs and 25,000 to 30,000 more. He said that property taxes have been lowered as a result of the tax revenues. If other states permit online gambling and Pennsylvania doesn’t, it will leak revenues to other states. He said that each state has different mores and that the authority to approve online gambling or not should rest with each state.
Miller said that studies have shown that gambling addiction isn’t worse on the Internet compared to physical gambling. Brown said that addicts will run out of money in a physical location, and they can be stopped. That’s not so easy to do when the person is gambling by themselves at home.
Online gambling advocates are trying to get more states to approve Internet gambling in states like California.
Jez San, the CEO of U.K.-based PKR, said in an interview that he believes California’s Native American tribes, which operate legal land-based casinos throughout the state, have successfully held off legislation legalizing online gambling in California. He said, “Until they have their pound of flesh, they will hold it up.”