Sands' Sheldon Anderson 1, Online Gambling Stateside 0

The US nanny state and a casino mogul combine to frustrate online gambling Stateside.

For a long time, I have covered attempts to regulate Internet gaming Stateside and its effects on offshore service providers like the microstate of Antigua & Barbuda. It's a long story, but ancient, pre-Internet laws prohibiting interstate gambling have been invoked by those concerned about "morals" to not only stop foreign gaming sites but also those operating across borders of US states. Perhaps unsurprisingly, operators of bricks-and-mortar casinos have also lobbied against further liberalization of gaming laws to allow interstate online gaming. Step forward Sheldon Anderson of the Sands. The end result is that we are back to a kind of Stone Age situation in which people are not allowed to do as they please with their own money over dubious "security" concerns--unless you physically visit the Sands, of course:

Efforts to allow internet gambling across the US have stalled, after a campaign backed by casino owners pushed back against industry efforts to allow more widespread wagering on laptops and smartphones. New Jersey, Delaware and Nevada became the first states to liberalise online betting in 2013, prompting industry executives to predict that longstanding prohibitions on the practice would soon crumble as others followed their example. 

How bad is it? Those operating the aforementioned real-life casinos have poured much effort into stopping the online juggernaut to apparent success. Earlier predictions that in-state gambling operations would result in considerable revenues have not materialized as a result:

Instead, 12 months later, revenues from the three states have failed to come close to lofty expectations, and quarrelling within the industry has shelved hopes for further expansion...[C]asino mogul Sheldon Adelson used his presence on the AGA [American Gaming Association] board to persuade the group to withdraw its support for online betting. Mr Adelson, the billionaire chairman of Las Vegas Sands, pledged to spend "whatever it takes" to stop internet gaming.

The reversal dismayed other AGA members, such as Caesars and MGM Resorts, which had been vigorously pushing for a federal framework for internet gambling. Mr Adelson and his allies then helped derail attempts to legalise online play in California and Pennsylvania, although they were unsuccessful in pushing for a provision in a Congressional spending bill to restore a blanket federal ban.

The 1961 Wire Act prohibited wagering via electronic transmissions, but in late 2011 the Justice Department reversed its interpretation of the law to allow individual states to establish their own internet betting schemes.

To be sure, part of the reason why online gaming has not really taken off is residual concern from financial services providers about the unsettled legal situation:

New Jersey, by far the largest market of the three to do so in 2013, registered just $111.8m in revenues over its first 12 months — well shy of the $1bn projections offered by analysts and state officials at the outset. Some attribute the poor performance to a miscalculation of consumer demand and technical glitches, while others point out that banks have been reluctant to clear online gambling transactions — a problem that has caused similar headaches for the emerging legal marijuana industry.

 The 2006 Unlawful Internet Gambling Enforcement Act, which the Justice Department used to go after offshore poker operators in 2011, has been an important obstacle. "Under [UIGEA], failing to block restricted transactions could result in liability. But there is no liability for over-blocking or refusing to honour Internet gambling-related transactions. This was a carefully considered provision designed to make it much more difficult for internet casinos to operate," said Michael Borden, an attorney with Sidley Austin and former congressional aide who helped draft the law.

In effect, many financial services providers have decided to err on the side of caution in overzealously restricting the use of depositor accounts for gambling purposes.  Absent a new law to replace the 1961 Wire Act (and UIGEA) by extension, we will still be stuck in this Flintstones-era situation.

Let my people do what they with their money. It's theirs to gamble with.