Internet Gambling Regulation in the United States: A Policy Comparison

Abstract

This thesis compares two competing alternatives for internet gambling regulation in the United States: prohibition as dictated by the Unlawful Internet Gambling Enforcement Act of 2006 (the status quo), and legalization as proposed by the Internet Gambling Regulation, Consumer Protection, and Enforcement Act and its companion bill, the Internet Gambling Regulation and Tax Enforcement Act of 2010. The analysis assesses the two policy alternatives using 6 criteria: youth gambling, problem gambling, defraudment by site operators, money laundering susceptibility, tax revenue, and effect on other forms of gambling. The research indicates that under the legalization bills, youth and problem gambling rates would increase slightly compared with the status quo, while money laundering susceptibility and other forms of gambling would be unaffected. Legalization would also increase player protections against defraudment and generate more than $10 billion of new tax revenue over the next ten years. This thesis recommends adoption of the legalization bill contingent on specific regulatory requirements, as the tax revenue and benefits to consumers greatly outweigh the costs of the marginal increases to youth and problem gambling.