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The Odds Are Good for Virtual Vice


If the American experience is any indication, Canadian efforts to regulate gambling on the Internet will fall flat. What Canadians should do is embrace this new

opportunity to expand their reach into the gambling market, rather than adding more ineffectual regulation and its cost to Internet users.

Originally published in the Globe and Mail. Republished with the permission of the author.


Sonia Arrison

 Author Notes

Director of the Center for Freedom and Technology at the California-based Pacific Research Institute

 Essay - 8/31/2000

You can't blame the Ontario government for being preoccupied: At least four of its ministries are straining to figure out how to regulate Internet gambling. It's a tall order, and if the American experience is any indication, Canadian efforts to regulate Net gambling will fall flat.

What Canadians should do is embrace this new opportunity to expand their reach into the gambling market and, in the process, annoy American regulators. It's simple to do.

Last month, a bill to ban on-line gambling failed in the U.S. House of Representatives, but its proponents say the fight's not over. The Internet Gambling Prohibition Act sought to ban most forms of on-line gambling. But even if the bill is passed in a second try, it will not work for a number of reasons -- reasons that Canadians should carefully consider.

On the Internet, geography doesn't matter any more. That means the traditional ways of regulating consumer and business behaviour have to be altered. For instance, if a government tries to ban the operation of gambling sites, the sites can easily move to another country and still reach customers all over the world. It's happening already.

Many of the Internet's estimated 700 gambling sites are based offshore in sun-filled places such as the Caribbean and Costa Rica. Because of this, they cannot be shut down by North American governments.

Since Web sites are accessible to consumers through local Internet service providers (ISPs), some regulators have suggested that governments control Internet gaming by forcing ISPs, such as America On-Line, to search for and block illegal gambling sites. But this won't work, either.

As Canadian Internet Handbook author Rick Broadhead said recently, it's a Wild West out there. If an ISP blocks a gaming site, the operators can simply keep changing Internet addresses every time they are blocked.

And if operators find this game of cat and mouse too cumbersome, users can still get to blocked sites by routing their browser's request through a foreign Internet server to reach censored addresses. Remember, the Internet was designed to last through a nuclear war.

No doubt, governments are concerned about on-line gambling, but trying to stop it would be fruitless and potentially harmful to liberty. In California, a law has been proposed to place credit-card companies on notice that gambling debts incurred on the Internet are not enforceable. But if people can't be held responsible for their actions, what incentive will they have to make responsible choices? True, some individuals will become addicted to gambling and run up costly bills. But that's already the case and is one of the risks of a free society.

If government substitutes strict regulations for individual choices, it will discourage the individual responsibility necessary for a free society. Canadians should not take these issues lightly.

Even as Ontario ministries scheme over regulations, their rivals in Alberta are already thinking of how they are going to steal away the world's gambling business. Alberta Gaming Minister Murray Smith was recently quoted as extolling the benefits of a government-run Internet gambling site. "You get money from other jurisdictions that aren't your own taxpayers'," he said, "plus, it sure beats some shady outfit in an offshore tax haven which may or may not pay out when the house loses." Perhaps he's got a point.

But why not open the market to Canadian businesses and let them provide jobs and revenue to Canadian communities? And if American legislators do succeed in passing the Internet Gambling Prohibition Act, just think of all the market share that Canadians could snatch from the United States.

Take heart, Canada. Internet gambling may wind up being the most exciting game of chance you've played since the Quebec referendum.

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Opinions expressed in this article are the opinions of the author, and are not necessarily shared by conservativeforum.org or the members of its Editorial Board.