On Big Government – Or Not

I couldn’t decide what sort of title to give this post, so I just went with the catch-all “Big Government.”  Barney Frank, while no hero of mine, has been a leading advocate of re-legalizing (including taxing and regulating) online gambling after the UIGEA was passed several years ago, surreptitiously tacked onto a safe ports bill that was supposed to protect us from terrorists. 
Yesterday, the House Financial Services Committee passed a bill that would “effectively legalize online poker and other nonsports betting, overturning a 2006 federal ban that critics say merely drove Web-based casinos offshore.”
Of course, one main motivation is taxes – money that’s desperately needed by the states:
“The bill would direct the Treasury Department to license and regulate Internet gambling operations, while a companion measure, pending before another committee, would allow the Internal Revenue Service to tax such businesses. Winnings by individuals would also be taxed, as regular gambling winnings are now. The taxes could yield as much as $42 billion for the government over 10 years, supporters said.”
I don’t really want to get into the debate about gambling (online or otherwise) being good or bad, although I was pretty surprised at how negative the comments on NY Times article were, considering how liberal their reader base usually is.  Supporters of legalization also point out that the activity is already happening – the revenues are just going to offshore companies.  The legalization most impacts the companies’ abilities to market to US customers, while it’s already easily possible for US players to get online and gamble via foreign sites.  Also, legalization and regulation could result in a safer (less rip-offs) environment for users.
But there’s a much bigger moral picture here.  I don’t think it would surprise anyone to learn that I’m in the “let people do what they want camp,”  which favors allowing online gambling.  (side note: the issue I care most about, despite the fact that I play online almost never, is online poker – which is a game of skill.  Still, this doesn’t mean that there won’t be a large number of people who, if online poker is legalized, wouldn’t lose a large amount of money playing poker online – there would be.  In other words, even though it’s a game of skill, there will be many unskilled participants who will still feel ill effects, just like they would playing online blackjack, because they don’t have the skills required!).  The quote I want to discuss is Barney Frank’s:
“Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it.”
Now, I’d be hard pressed not to agree with that statement.  The problem I see comes when the next step is that people who DO spend their money foolishly are then rewarded with money from the federal government (I don’t think it’s really up for debate – this happens).  See, if the government is going to compensate people who demonstrate lack of judgment / stupidity / ignorance / “foolish spending of money,” then, I’d rather the government tried to prevent those people from doing it in the first place.  Of course, this isn’t really practical – you can’t ban only gambling addicts and people who have no clue about money management from online gambling.  Herein lies the problem:  I want to protect my own right to gamble online, while at the same time preventing other people from losing all their money gambling online and then going to the government (aka: ME, the taxpayer)  for assistance. 
-KD
disclosure: long PYGMF (PartyGaming stock)

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