Why We are Outraged: An Economic Analysis of Internet Gambling

Abstract:     
Why are we outraged? The United States is outraged because no taxes are paid on the $6 billion that is shipped abroad. The misery and expenses that follows internet gambling is distributed among the various states, however.

Several solutions to the lack of jurisdiction over internet gambling sites have been proposed. First, the 2006 Act forbids Internet sites from receiving money from U.S. financial institutions and forbids U.S. financial institutions from sending payments to foreign sites. Second, Ryan Landes proposes a voluntary regulation of foreign sites, who agree to reduce underage gambling and fraud, as well as pay taxes. Landes argues that these are the key problems with internet gambling. His proposal reads like a wish list for existing "bricks and mortar" casinos as it would permit them to own internet gambling sites. My proposal is related, but different.

I argue that, if the foreign site agrees to pay taxes and will work to reduce underage gambling and fraud, we will allow their "designated employees" to visit the U.S. Pointedly, I do not open the door to American casinos to operate internet gambling sites, nor propose a new agency. In the final analysis, the costs of gambling may exceed its benefits.

Number of Pages in PDF File: 8

Keywords: Tax, internet gambling, casino, poker, federal law, state law, banks, Ryan Landes, foreign site, underage gambling, fraud

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