Why Prohibition Doesn’t Work and Is Even Worse Than You Think

The Eighteenth Amendment has been a smashing success, effectively banning all production, sale, and transport of the Devil’s Drink in the United States since 1919.  Wait – what’s that? It only lasted 14 years before it was repealed? What?! But it was such a great idea!

Time Magazine officially crowned alcohol prohibition one of the worst ideas of the 20^th Century (if they actually ranked the ideas, it’d probably fall somewhere between National Socialism and the Red Sox selling Babe Ruth to the Yankees).  Not only did prohibition fail to curb the imbibing of the masses, but it also resulted in the growth of organized crime and corruption so overwhelming that court dockets couldn’t keep up with the charges. Unsurprisingly, the nation rejoiced when Congress repealed the amendment in 1933.

When it comes to banning popular activities that stand to generate enormous sums of licensing and tax revenues (not talking about pot, Cheech) you’d think that the federal government would have learned its lesson the first time around, wouldn’t you? Yeah, you know where I’m going with this…

According to the Congressional Committee on Taxation, the U.S. stands to gain $42 billion in tax revenue in the first 10 years following federal legalization of online gambling. Online casinos would also be subject to licensing fees to operate in the U.S., which would reach into the billions, and legalization would create tens of thousands American jobs. Not to mention that online gambling does not pose a threat to traditional brick-and-mortar casinos. In fact, the brick-and-mortar casino giants like MGM Grand and Wynn Resorts are anxious to get in on the action. So add that all up, factor in the slow economic recovery, the need to create jobs, and a staggering national deficit – legalization seems pretty enticing.

So, in these dire times, what could possibly justify banning such a potentially lucrative activity? Advocates of the federal government’s prohibitionist regime argue that Internet gambling enables addictive behavior, causes bankruptcy, harms minors, and promotes organized crime. Under the government’s current approach, however, the law only proscribes Internet casinos from operating. Since it would be nearly impossible to prosecute all individual gamblers, the law does not criminalize the actions of an individual bettor.  Despite the lack of domestic online casinos, demand for Internet gambling has not waned. As a result of federal policy, in 2010, Americans gambled an estimated $16 billion through offshore Internet casinos. These shady websites operate free from government regulation, thereby exposing Americans to the very same dangers supposedly justifying the prohibitionist regime.

Now let’s take a look at Internet gambling prohibition actually fulfills its objectives. Failure to prevent addictive behavior and personal bankruptcy due to offshore websites lack of concern for its customers? Check. Ineffective age verification software on sketchy third-world websites that allow underage Americans to gamble? Check. Promoting organized crime through non-existent regulation of offshore websites? Check. Forcing billions of American dollars overseas to fraudulent service providers? Check. Being mired in the unfavorable position of incurring all the social costs of Internet gambling without reaping any of the financial benefits? Check.

Next time Congress wants to cut Granny’s Medicare, maybe we could bring some of that American money back here to the States where it can do some good, although I wouldn’t tell Granny to hold her breath. Just like the Eighteenth Amendment, our legislature acts like it has another winning hand.  Not too surprising coming from a Congress less popular than polygamy.