Mar
12
2009

Is Regulated and Taxed Online Poker Really What We Should Aspire To?

The Unlawful Internet Gambling Enforcement Act of 2006 changed the online poker world as we knew it. Many online poker operators pulled from the US-market leaving only a select number of sites available for US-based players. In the wake of the UIGEA the Poker Players Alliance grew in voice and have been lobbying Washington D.C. ever since to get an exemption for poker because it is a game of skill. The PPA has also made the case for taxed and regulated online poker in the United States.

Everyone in the poker community talks about government regulated and taxed internet poker with such hope and enthusiasm, but I really do question whether that is the right path. Is government involvement really a good thing? Bureaucrats flexed their muscles in 2006 and summoned all the power they could to ban online gambling. By allowing them to become a major player in the online poker market we would only increase the size and scope of their influence in the industry. While online poker could once again be ‘legal’ again, who is to say that administrations down the road don’t decide to impose another ban. A secondary prohibition would¬† be even more damning than the one we have now because poker sites would be even more dependent on United States than they were prior to the UIGEA. Everyone should be warned that the power to regulate is the power to destroy something.

One of the biggest issues with current legalisation proposals is the taxation aspect. There has been talk that taxation of online poker would be a great way to finance some of the mind blowing spending the Obama administration is undertaking. Corporate taxes would be passed onto players and rake will increase compared to pre-UIGEA levels. Teamed with less competition due to ‘regulation’, the price of poker will go up even further. There is also the potential for the government to force poker sites to withhold winnings for personal taxes.

Some people will contend that government regulation is needed in order to stop another Absolute Poker/Ultimate Bet type cheating scandal (or worse). The free market is a much better form of protection for consumers than any type of government involvement though. If we cast our minds back to pre-UIGEA times it wasn’t exactly the Wild West, there were many reputable sites with solid customer service that satisfied consumers. The occasions that there was something shady going on, it wasn’t the government that discovered it, but a bunch of 2+2ers. Subsequently, the identity of the culprits came to light, all without any government involvement. In fact, the US-government currently stands in the way of prosecuting fraud because according to them online gambling shouldn’t even be taking place. So I think it is important to realise that anytime government talks of regulating online poker, what they really want is the ability to get a slice of the pie and ascert their influence on it. They may pretend they are doing it for a noble reason like “protecting” consumers.

Our best hope is for a proposal that simply makes the UIGEA go away. Which thankfully is what Barney Frank is fighting for at the moment. Hopefully, those advocating government involvement in the industry have a re-think on whether that is the best idea in the world.

About the Author: Andrew Ferguson

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