Prohibition spurs black market, creates long-term consequences

2014-02-10T00:00:00Z Prohibition spurs black market, creates long-term consequencesBy Mark Lipparelli Arizona Daily Star
February 10, 2014 12:00 am  • 

Prohibition doesn’t work. As history shows, the Volstead Act, prohibition of alcohol in the 1920s, closed the doors of legal, regulated businesses and opened a Pandora’s box of unintended consequences.

These consequences — criminal activity, illegal manufacturing and distribution, and more — took years to fully combat and significant resources. All for the act to be repealed later.

Let’s not let history repeat itself. Americans enjoy  gambling. Gambling is woven into American history, having existed in some form since our nation’s establishment. Let’s rely on common-sense safeguards and consumer protections by extending well-established and effective gaming regulations to the newest form, online gaming.

Naively assuming a ban would overcome Americans’ interest and participation in online gaming sets up local, state and federal law enforcement with tremendous expenses and turns millions of Americans into criminals.

The black market exists. Today’s unregulated online operators are flouting their products in clear violation of state and federal law with no regulatory controls or tax obligations.

Estimates show growth in unregulated online gaming markets is explosive: an estimated 1 million Americans or more spend nearly $3 billion annually on overseas gaming sites. Most of these Americans aren’t criminals; they’re simply looking to participate in the newest form of gaming — online.

The U.S. should harness this practice, not vilify or ignore it. Moreover, the billions of dollars this new form of gaming technology generates presents a healthy funding model to cover costs associated with regulation and legal enforcement.

Modern technologies associated with online gaming exist to protect consumers — including minors, gambling addicts and others — and these safeguards are being tested in states like New Jersey that allow for online gaming within their borders. These technologies, while not perfect, will continue to improve for the financial, health-care and gaming industries.

Moreover, when properly implemented, the tax revenue generated through online gaming can cover not only the expenses to ensure consumer protections but can also support communities’ budgets to pay for essential services such as education.

As with previous versions of draft legislation, states and licensed industry participants should have the option of whether they support online gaming at all. For those that do, many will likely limit online gaming to competitive poker.

It’s no secret that many state and local governments are woefully in need of new revenue streams. Online gaming holds the potential to assist with these budgetary shortfalls.

State lotteries are a perfect example of leveraging long-standing entertainment to help subsidize public-sector treasuries.



Mark Lipparelli is the founder of Gioco Ventures and former chairman of the Nevada State Gaming Control Board. He is now a consultant to the gaming and entertainment industries.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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