A Minute With...

John Kindt, expert on business and legal policy

1/9/2012  8:00 am

John W. Kindt, a professor of business and legal policy at Illinois, is a leading national gambling critic who has testified before Congress about the societal, business and economic impacts of decriminalizing gambling. Kindt is the author of the recently published book “The Gambling Threat to Economies and Financial Systems: Internet Gambling.” He spoke with News Bureau Business and Law Editor Phil Ciciora about a recent ruling by the Department of Justice that could lead to legalized online gambling and further economic turmoil. (Watch a video of Kindt discussing the effect on Internet gambling on the economy.)

Does this Justice Department legal opinion open the door to legal gambling on the Internet?

image of professor john kindtYes. In fact, it opens the door to all types of gambling. People think Internet gambling is a harmless activity, but it’s not. Fun and games is playing chess or checkers. Playing chess or checkers for money, however, is gambling, and there’s a big difference in the cost to society. You’re creating an artificial risk to transfer money from one person to another without any productivity. That is one reason the U.S. National Gambling Impact Study Commission enacted by Congress supported a continued and complete ban on Internet gambling.

The legal opinion was written in September but not released to the public until Dec. 23. Why did the Department of Justice wait so long to make its opinion known?

The fact that the Department of Justice waited to release something so economically detrimental and controversial over the holidays is a typical move to avoid public scrutiny.

Obviously, this is news they wanted to bury. But it’s an amazing document because the net impact is that a bureaucrat has issued a new controversial interpretation of the 1961 Wire Act, which was designed to attack organized crime. It’s a law that has withstood legal challenges for over 60 years. But this one bureaucrat in the Department of Justice has changed 60 years of precedent, reversing it 180 degrees overnight.

The effect this legal opinion will have is that it is slowly removing almost all regulatory oversight of gambling. And once gambling is on the Internet, it’s in every living room, office, school and mobile phone.

And it’s an economically destructive activity, which is going to cost the U.S. hundreds of billions, if not trillions, of dollars. This is a strategic economic threat that needs to be addressed by Congress, and the Department of Justice really needs to re-evaluate its opinion.

But they need to do it quickly. The Illinois State Lottery director has said buying lottery tickets over the Internet will be available in the next three months. So there are plenty of interests who will try to game the situation to benefit financially from this ruling, because the potential take from Internet gambling is enormous. It’s so big that, in short order, it could destabilize the economic and financial engines of the U.S., which is one reason Congress enacted the Unlawful Internet Gambling and Enforcement Act in 2006.

Will this ruling allow states to band together to allow gambling across state borders, so-called Interstate Internet wagering?

States are going to do whatever they think they can get away with to expand gambling simply because they need the revenue. The only way to prohibit it is for Congress to completely ban it again, because states need more than a little oversight when it comes to certain things that have the potential to destroy their economies. Internet gambling is public enemy No. 1 in that regard. It’s an incredible economic danger that cannot be overstated.

Couldn’t legal, regulated Internet gambling actually stimulate the economy?

Gambling is an economic cancer on the body politic, it’s a black hole of economics, and the only way for the U.S. and the world to get out of the current economic malaise is to grow the economy. Gambling shrinks the economy. It shrinks the consumer economy because people are dumping their money into non-productive activities instead of purchasing cars, refrigerators, computers and the essentials of life such as food and clothing.

 

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