Weekly Briefing

Facebook casinos?

Gambling industry pushes dangerous last-minute bill in waning days of Congress

In many ways, it’s hard to imagine that gambling could become more pervasive in American culture than it already is in late 2012. With the explosive growth of casinos, state-run lotteries and television poker, the face of the nation has changed a great deal in recent decades. In the process, the gambling (sorry, gaming) industry has been transformed from a roguish realm on the edges of society inhabited and run by “wise guys” into a mainstream, corporate-controlled behemoth.

Interestingly, however, despite the rapid growth and transformation of the industry, there is one last, great wall that the industry has yet to fully breach: Today, it is still illegal in the United States to gamble over the Internet. Mainstream financial institutions are not permitted under federal law to process your credit card so that you can bet money on poker or “slots” or other casino-like games via your home computer.

Oh sure, there are lots of ways to sidestep this law. Some gambling sites attempt to evade it by operating out of offshore locations. Many “poker” sites allow you to play for “points.” Still other sites charge players for the entertainment that comes with accumulating points or other virtual “prizes.”

Despite all of these tricks, however, the hard fact remains that fully-fledged, 365-days-a-year, 24-hours-a day, online casino gambling for cash is not legal in the United States. As a result, right now despite all of its successes, the giant, insatiable and multi-billion dollar casino industry has yet to reach its Holy Grail.

Change in the offing?

Needless to say, there are fleets of highly-paid casino industry lobbyists working day and night to change this. And right now, in the waning days of the 112th Congress, these people may just have victory in sight.

According to a new alert from the experts at the nonprofit, nonpartisan watchdog group Stop Predatory Gambling (note — this link is to a PDF document), the casino industry has developed a behind-closed doors proposal that it hopes to worm stealthily through the House and Senate in the coming days. And given the prominence of the bill sponsors—Senate Majority Leader Harry Reid of Nevada and veteran Republican Senator Jon Kyl of Arizona—passage is not beyond the realm of possibility. This seems especially true given that the bill has been craftily labeled with the innocuous, mom-and-apple-pie name of “The Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012.”

UIGEA (the Unlawful Internet Gambling Enforcement Act) is the existing law that has done much to prevent online gambling thus far. By “strengthening” it and enacting “poker consumer protection” what the bill would really do is legalize online poker for cash for the first time in U.S. history. And while other games—particularly the real mother lode (i.e. online “slots”)—would be prohibited, Washington insiders seem to take it as a given that legalization of “poker” would provide just the crack in the door that the industry needs in order to pave the way to the full  legalization of online slots in the future.

This is from the Stop Predatory Gambling alert:

“Gambling investment analysts have admitted the internet poker casino business model by itself is ‘clearly unsustainable’ and the key to the future lies in expanding into other forms of gambling, affirming that this current massive ‘poker-only’ lobbying push is really about legalizing casinos on Facebook and the rest of the internet.”

Facebook gambling?

What’s perhaps most amazing and disturbing about the direction that this is all headed is that it’s not just about creating “adults only” casino-like websites. What the industry really has in mind is mining the world of social networks and especially the disposable income of young people.

This is from the Alert:

“According to a Wall Street Journal report, only 1.8 million people played poker for money in the U.S. in 2010- that is only ½ of 1% of all Americans. The reason for the costly lobbying push is gambling operators want tens of millions of Americans, especially our nation’s youth, to lose their money gambling online…a lot more than a tiny ½ of 1%.

No demographic is a bigger target for the casino operators lobbying for internet gambling than America’s kids. In a very short time, social gaming has mushroomed into a multi-billion dollar industry. Zynga which accounts for 12 per cent of all Facebook’s revenues due to its games such as FarmVille, launched Zynga Slots in the UK in June 2012, while the world’s biggest online gambling company, bwin.party, announced it launched its own social gaming operation. Zynga is one of the most aggressive advocates lobbying for the so-called “Gambling Prohibition Act” (the Reid-Kyl bill.)”

The alert explains that the industry has been testing some of its models in Great Britain:

“Over the past year, Facebook has madeBritaina testing ground for games that would let users gamble on virtual fruit machines, bingo, poker and roulette to prepare itself in case theU.S.legalized online casinos.”

And, as the alert makes clear, such models pose an enormous threat to the well-being of our kids:

“More than 20 million American kids under 18 actively use Facebook; 7.5 million of them are younger than 13 and more than 5 million are 10 and under, according to projections from Consumer Reports’ 2011 State of the Net survey. This despite Facebook’s terms of service that require users to be at least 13 years old.

Gambling operators like Zynga deliberately use cartoon characters to pitch their online slots directly at children.…

While a limited number of tech-savvy parents use parental controls to block gambling sites, this does not prevent young people from gambling on Facebook because, along with similar social media sites, it would not get flagged.

It’s patently untrue when proponents say “regulating” internet gambling would lessen the amount of addicted citizens. Land-based casinos- owned by most of the very same gambling operators lobbying for internet casinos – take as much as 60% of their profits from problem gamblers. With their long track record of exploiting problem gamblers as a major part of their business model, how can any credible person conclude giving these casino operators the exclusive right to run internet casinos would have a different result?

Internet gambling is the most addictive form of gambling. Almost 1 out of 2 internet gamblers (42.7%) can be classified as problem gamblers, according to a report by prominent international gambling addiction researcher Dr. Robert Williams who presented at the National Council on Problem Gambling Conference in 2011.”

Going forward

At last check, the main threat to final passage of the Reid-Kyl bill was not opposition from consumer protection advocates or anti-gambling groups motivated by a desire to control a predatory industry. Rather, the loudest opposition was coming from state governments worried about the impact of Internet gambling on the revenue streams of state lotteries. These folks actually have designs on cornering the online gambling market for themselves.

While not terribly encouraging from a moral standpoint, let’s hope that these opponents are successful in the coming days in preventing fast-track passage of the bill. And once that happens, let’s hope advocates like Stop Predatory Gambling are successful in moving the debate over this critical issue out of the shadows.

Whatever its venue, at its core, gambling remains the same thing it has always been for most of the customers: A sometimes entertaining sucker-play in which average people are conned into willingly surrendering their wealth to “the House.” Common sense dictates that government must retain real and meaningful regulation of such a “product” if we are to prevent the mass exploitation of the citizenry.

(Image: Zynga)