Restore America’s 10th Amendment: Online Gambling Ban Intrudes On State Sovereignty

Katie McAuliffe Executive Director, Digital Liberty
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Federalism was not the Tenth Amendment to the constitution for an arbitrary reason. Maintaining checks and balances on power, including the relationship between states and the federal government, is fundamental to American governance. Further, the closer a government is to its voters the more responsive it will be. When each constituent is a face and not a number, elected officials are more likely to know their constituents’ wants and needs.

A bill in this Congress, the “Restore America’s Wire Act “(RAWA), goes in the wrong direction. While online gambling is a contentious issue, the bill, introduced by Representative Jason Chaffetz (R-Utah) and Sen. Lindsay Graham (R-S.C.), oversteps the constitutional principle of federalism by banning state regulation of online gambling, chipping away at the constitutional balance between state and federal governance. While gambling can be a contentious issue, this fact actually makes it more appropriate that the issue be decided at the state level, instead of a one-size-fits-all federal approach.

Proponents maintain that the online gambling ban via RAWA will protect problem gamblers, and prevent bad actors from using these sites to launder money and fund nefarious causes. However, RAWA does not ban bets on horse racing or fantasy football. These two exemptions show that the law is not about protecting problem gamblers or keeping gambling out of the black market.

Fantasy sports are some of the most popular gambling enterprises on the web. Maybe there were not enough online poker players to prevent the federal government from shutting down online poker websites and seizing hundreds of millions of dollars from U.S. citizens, but fantasy sports has too many fans to ban. Regulators know better; just like attempts to push out businesses like Airbnb and Uber caused intense protests, action against friendly fantasy sports wagers would certainly result in a massive backlash.

RAWA would keep other sports betting illegal, even though, as NBA Commissioner Adam Silver points out, there are benefits to a legal, regulated structure to the professional sports world. In a Nov. 13, 2014, New York Times editorial Silver said, “I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”

In February 2015 publication of ESPN Magazine, Silver went on to say, “the best way for the league to monitor our integrity is for that betting action to move toward legal betting organizations, where it can be tracked. That’s the pragmatic approach.”

The states have always made decisions about how and when to legalize gambling (if it at all). That is why a diverse coalition of organizations including the National Governors Association, National Conference of State Legislatures and numerous civil libertarian, free market and conservative groups have already spoken out against this legislation.

RAWA would not “restore” the Wire Act, the only thing RAWA does is ban states from authorizing and safeguarding online betting within their own borders. New Jersey, Nevada, and Delaware have already established forms of online wagering that accurately verify the persons gaming are within the state borders and of age.

Just as Silver sees the dangers of an unregulated sports betting market, banning online gambling will only increase the presence of the gambling black market where players will be far more likely to be targeted by bad actors.

The people this bill purports to protect are already exposed to overseas operations run far outside of state jurisdiction by seedy elements. The bill does not stand on some high moral ground, if it did there would be no exceptions created by popular demand, or it would at the very least acknowledge that an outright ban prevents states from stopping black-market activities. This bill is merely another attempt to break down federalism and weaken the Tenth Amendment to the Constitution.

Katie McAuliffe is Executive Director of Digital Liberty and Federal Affairs Manager at Americans for Tax Reform