Last week the New York Post reported that efforts to legalize online gambling nationwide might be gaining momentum among key senators and representatives.
During last month's debt-ceiling negotiations, Sen. Jay Rockefeller, D-W.Va., proposed federal legalization of online gambling as a way to raise an estimated $41.8 billion for the federal government and an additional $30 billion for states over the next decade.
Although the proposal failed at the time, there are indications that the lure of gambling revenue is keeping this terrible idea alive.
The latest reported maneuvers in Congress appear to be happening at the same time several states are considering legalizing online poker and other wagering games as a way to raise revenues.
Indeed, one of the key indications that federal legislators are considering legislation, according to the Post, is a request from Senate Majority Leader Harry Reid and Sen. John Kyl, R - Ariz., to the Justice Department to help stop state legalization efforts, not because of concerns about online gambling per se, but instead to make federal pre-emption of state law in this area easier.
Kyl, who has strongly opposed Internet gambling, may be modifying his stance, noting on his website that Internet poker is a game of skill that could merit an exception to bans on Internet gambling. The Post also gives reason to believe that other key Republican leaders like House Speaker John Boehner and House Majority Leader Eric Cantor, may be swayed by powerful lobbyists on this issue.
In theory, taxes on newly legalized gambling might address government revenue shortfalls in the short term. But because of the non-productive, parasitic nature of gambling, we can think of very few revenue enhancement ideas more cynical or irresponsible.
When challenging efforts to legalize gambling in his native Nebraska, Warren Buffett — who understands something about value investing — said it well when he said of gambling, "It's a terrible way to raise money. It's a tax on ignorance."
It is also a tax on the poor. By holding out pipe dreams that simply won't come true, gambling lures the poorest of the poor. Study after study shows an inverse relationship between household income and wagering.
Most devastating are the enormous social costs associated with this pie-shrinking transfer of wealth. The huge dopamine rush associated with small gambling wins, and — oddly enough — with near wins, fosters powerful addictions to gambling that devastate families and communities. According to a Gamblers Anonymous survey of 400 gambling addicts, 57 (about one in seven) admitted that they regularly stole in order to maintain their gambling habits.
The foundation to enduring financial responsibility in families, in our economy and in our government is a society that grows people and their ability to add value to one another's lives. Gambling does precisely the opposite. It preys on ignorance, poverty and greed to destroy people and rob value. Consequently, encouraging a zero-sum transfer of wealth where most who stupidly participate will lose and many will become addicted to the potential payoff is morally wrong. To do so simply to increase the kinds of transactions from which government can suck some additional revenue into its coffers is cynical at best.
The only long-term winners in gambling are the purveyors of the games. They are lobbying a ne'er do well and seemingly desperate Congress to make a terrible bet. We urge our readers to exert their influence and keep this terrible idea from resurfacing.
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