FC: Fighting terrorism means banning Internet gambling? from CEI

[Declan McCullagh <declan@well.com>]

Unfortunate, but not new... See, from Oct 2001:

"House panel bravely thwarts terrorists -- by banning Net-gambling"
http://www.politechbot.com/p-02649.html

-Declan

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Subject: CEI's Weekly Commentary:  E-commerce and Terrorism
Date: Wed, 22 Jan 2003 15:34:11 -0500
From: "Richard Morrison" <rmorrison@cei.org>


CEI C:\SPIN

This issue­ - Regulation Roulette:  E-commerce and Terrorism.

This week's c:\spin is by Braden Cox, Technology Counsel, Project on 
Technology and Innovation, CEI, January 22, 2003.

On January 7, 2003, Rep. James Leach, R.-Iowa, introduced yet another 
internet gambling bill, the Unlawful Internet Gambling Funding Prohibition 
Act (H.R. 21 surely just a coincidence to the card game 21 or Blackjack ). 
The bill is the same text as H.R. 556, a bill passed by voice vote in the 
House last Congress that failed to move in the Senate before the end of 
session. The bill does not prohibit internet gambling outright. Rather, it 
indirectly shuts down online gambling by prohibiting banks from processing 
bank instrument transactions that involve unlawful internet gambling web 
sites. Those in the technology industry should follow the movements of this 
bill because it attempts to regulate electronic commerce in the name of 
fighting terrorism.

The means by which consumers and gambling site owners interact credit card 
payments and wire transfers also happens to be a medium open to abuse by 
those with criminal intentions.  If you prohibit the credit card payments, 
then you negate the possibility that some of these payments will go to 
terrorists.  According to Rep. Joseph Pitt, R-Pa, it may be impossible to 
keep illegal gambling sites off the World Wide Web, but it is entirely 
possible to prevent American credit card companies from completing these 
transactions that these crooks need to make their money.   The text of the 
bill states that law enforcement has identified internet gambling as a 
significant money laundering vulnerability (emphasis added).

The bill s line of reasoning goes something like this:  internet gambling 
consumers pay by use of credit cards and wire transfers; credit cards and 
wire transfers are payment mechanisms often utilized by criminal money 
laundering operations; terrorists utilize money laundering schemes; 
therefore, some consumers of internet gambling may in fact be criminals 
laundering money to further terrorism.

Casual references to an activity s potential link to terrorism are the 
latest vogue amongst advocates of regulation, whether the target is sport 
utility vehicles, illegal drugs, or internet gambling. Certain industries 
are more at risk than others to regulation in the name of preventing 
terrorism. Carried to its logical conclusion, though, the areas of 
technology and e-commerce are especially vulnerable to regulation in the 
name of terrorism.

E-commerce by its very nature is a simple business channel for almost 
anyone to make a buck (if not a profit).  EBay and other websites have 
turned millions of individuals into entrepreneurs and small business 
owners.  However, what facilitates legitimate business concerns also makes 
it opportune for those with illegal motives.  Anonymity and the easy flow 
of funds are a boon to those surreptitiously conducting illegal activity.

Mr. Leach doesn t mind that this bill would in effect prohibit internet 
gambling. His recent press release states that internet gambling serves no 
legitimate purpose in our society.   The millions of individuals that use 
these sites, whether it is for traditional casino style gambling, fantasy 
leagues, or the ubiquitous Super Bowl office pool, might disagree with Mr. 
Leach about the value of internet gambling.

Legislators and the public should be wary of the tactic of prohibiting 
ordinary business activities just because there might be remote and 
indirect links to terrorism.  Terrorism is a life or death concern that 
should not be used by those with regulatory agendas in an emotionally 
manipulative way.  E-commerce furthers the advancement of commercial 
dealings between consumers, their banks, and business owners so that 
transactions happen in real time between strangers without knowledge of one 
another s motives.  Regulation because someone might use the benefits of 
e-commerce for illegal purposes is a bad idea.

C:\SPIN is produced by the Competitive Enterprise Institute.




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