Don't try to restrict online gambling - regulate and tax it


Since the U.S. House has managed to pass legislation to restrict online gambling, it is now more important than ever for the American public to know that this effort would not deter underage gambling or protect the vulnerable in society. In fact, this type of legislation would ultimately exacerbate the very issues that it aims to address, making Internet gambling behavior more hidden and increasing the likelihood that the best operating standards of this industry would not be followed and enforced.

Here is the secret that these politicians don't want the public to know about our industry: We want to be regulated. We want to be taxed. We want to be licensed. Instead of dealing with us constructively to address issues of mutual concern, these legislators prefer to pretend that they can control the Internet.

Instead of protecting the public, they would rather waste time on public posturing to their partisan base, and they would rather waste tax dollars on empty legislative exercises instead of taking ethical actions that would increase revenues to cities, states and the federal government from the taxes we would pay.

Internet gambling is a $12 billion industry with more than 2,000 companies. Increasingly, these are public companies operating under transparent practices of good governance. Despite what these members of Congress think, we are a strong industry, and Americans are participating in growing numbers. Overall, Americans wagered nearly $6 billion online in 2005, compared with about $1.5 billion in 2001.

Why spend time in a futile, meaningless attempt to restrict Americans from participating when time and effort can be better spent determining how best to regulate us? America's land-based gambling organization, the American Gaming Association, is supporting legislation that would set up a congressional commission to explore the feasibility of regulation.

Under regulation and licensing, best practices would become standard.

First, we would be able to better prevent underage gambling. Currently, online gambling companies have a number of safeguards to prevent minors from gambling. We do not advertise to the age group, and we have clear rules on our sites. We double-check credit card information, and we can provide links to filtering systems so parents can add restrictions. New technologies can provide regulators with detailed information, including the ability to provide an audit trail for each transaction or to block participation by certain players or classes of players. Regulation makes these practices enforceable and extends their reach.

Second, we could better deter compulsive gambling. Currently, companies use software to help customers keep track of their betting histories. These controls help customers assess and limit their behavior, and can also be used to impose cooling-off periods. In addition, many companies provide links to organizations that can help problem gamblers. With regulation, these practices could become standard within the industry.

Third, regulators can ensure transparency and good corporate governance. Many companies provide complete information about their operation and location, including e-mail addresses, postal addresses and phone numbers so they are easily accessible. In addition, a growing number of companies provide thorough training programs to employees to ensure that they do their jobs ethically and know how to handle potential problems with customers in ways that protect their privacy. With regulation, these practices could be required of all gambling companies that seek to do business in the United States.

The United Kingdom decided the best way to limit the risks of online gambling is not to ban it but to regulate and control the industry. Britain has also established a national gambling commission to protect consumers, restrict access to minors and prevent money laundering and other criminal activity. The British structure is a successful model that we can follow.

The issue now is not whether it is possible to stop online gambling. The issue is: What are the most effective ways to regulate a business that is growing and thriving and clearly has a market to serve? Congress should take the responsible course of action by focusing on regulations that protect the public and mandate the best practices of all online gambling companies.

David Carruthers is CEO of an online wagering company. His e-mail is

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