Attempts to prohibit Internet gaming are unlikely to succeed; they will have substantial unintended consequences, and they may have adverse implications for other forms of e-commerce.

Because of the inter-state and international nature of the Internet, it is nearly impossible to establish a prohibition and enforcement regime which does not compromise individual privacy and/or deputize private sector entities to enforce social policy. Most Internet gaming prohibitions, if enacted, would only succeed in driving Internet gaming underground and keeping it offshore. H.R. 21 and S. 627, currently under consideration in Congress, would drive payment processing from the most transparent forms (credit card transactions) toward the least transparent (blind e-cash). Finally, if the U.S. sets the precedent of using settlement (meaning payment processing) as the regulatory choke-point for e-commerce, it is reasonable to conclude that governments at every level in every country will do the same – that could make e-commerce unworkable.

1. Licensing and regulation of Internet gaming will extend appropriate protection against minor gambling, problem gambling, and money laundering.

Many jurisdictions, from the United Kingdom and Australia to Curacao and Antigua have commenced the process of regulating Internet gaming. They have found that appropriate regulations can ensure that Internet gaming operators know their customers, watch for signs of problem gaming, and follow established money-laundering criteria applicable to other industries.

2. Licensing and regulating Internet gaming could be a substantial revenue source for U.S. jurisdictions.

Today, in the absence of U.S. licensing, the U.S. Internet gaming market is estimated to be $2 billion, and that is expected to grow. If the operators processing those wagers were U.S. based, that growth will yield many millions of dollars to state governments and the federal government as well. However, because the U.S. chooses not to license, those wagers are placed offshore. If Internet gaming is going to exist, and it is clear that it will, then U.S. jurisdictions should take appropriate steps to ensure that their revenue interests are protected.

A U.S.-based licensed and regulated Internet gaming industry would "suck all of the oxygen" out of an off-shore industry without U.S. licenses.

Rep. Bobby Scott (D-VA) put this well in hearing when he said, "If people in the U.S. have a choice between betting at Offhshore.com or Caesar'sPalace.com, they are going to go to Caesar's every time. The marketing potential of U.S. branding, combined with the confidence that players would feel with a U.S. licensed entity would allow U.S.-licensed operators a substantial advantage.

In sum, licensing and regulation of Internet gaming is the best way to ensure appropriate consumer protections, appropriate protections against money-laundering, and an appropriate revenue stream to U.S. jurisdictions. Efforts at prohibition are unlikely to achieve any of these.

All information contained within courtesy of ProFreedom (www.profreedom.com).