How to beat gambling Al Capones

Al Capone famously said that Prohibition caused nothing but trouble. Although he himself caused much of it, he did have a point. 

{mosads}The 21st-century version of the Volstead Act is the Unlawful Internet Gambling Enforcement Act of 2006, which is intended to prohibit Internet gambling. As members of the House Energy and Commerce Committee will hear, UIGEA mirrors Volstead’s mistakes: ambiguity about what constitutes “illegal gambling,” making financial institutions the implementers rather than law enforcement and limiting states’ authorities.

We have gone by many titles during our respective careers — judge and FBI director, governor and secretary of Homeland Security. With those experiences and perspectives in mind, we have joined a new effort, Fair Play USA, to tackle the growing problem of illegal Internet gambling, to help better define what is permissible and identify the appropriate tools and rules to help federal, state and local agencies to enforce the law.

Although the law prohibits Internet gambling, it is estimated that Americans spend more than $6 billion every year on this thriving bootleg industry. Like the rum runners of old, recipients of these billions are shady foreign operators running an estimated 1,700 offshore sites beyond the reach of U.S. law enforcement. 

This environment offers no controls to prevent money laundering by organized crime, protect players from rigged games or financial fraud, prohibit minors from playing or to facilitate collecting tax revenue. The existing, well-intentioned legislation has simply not been able to prevent this activity online.

The solution is to provide law enforcement better tools to combat illegal operators, ban the vast majority of Internet gambling and protect consumers by establishing a strict regulatory framework for online poker, re-establishing the rights of states and tribes to accept or prohibit online poker as they see fit.

Improving law enforcement tools starts with clearly defining “illegal gambling” and empowering proper federal and state authorities to enforce the law, rather than banks. These unambiguous crimes would help law enforcement agencies successfully prosecute the operators of rogue sites.

While the law already clearly prohibits betting on sports and casino games, it is unclear on a game of skill like poker, which millions of Americans already play with family and friends or just to have fun. Establishing a strict regulatory framework for licensing and enforcement of online poker could provide a safe, legal environment for this activity to continue.

This regulatory framework should mandate the use of effective consumer protection technology to ensure games are fair, honest and played only by adults. Age-verification technology used to limit online alcohol purchases by minors could be used to prevent underage online poker play.

The rights of states and tribes must be protected also by authorizing them to accept or prohibit online poker and mandating the use of sophisticated tools to block access in prohibited areas. Major League Baseball, for example, uses geo-location tools to prevent visitors to MLB.com from accessing content from blacked-out locations.

This regulatory regime would allow states to capture much-needed revenue from legal U.S.-based entertainment companies providing online poker, rather than lose it to offshore sites as under current law.

In 1933, Congress finally acted to update the law and end the anarchy of Prohibition by passing the 21st Amendment, with Pennsylvania casting the deciding vote to ratify it. Consumers, law enforcement and state authorities once again should have the clear advantage over illegal offshore operators who exploit loopholes and can siphon illicit billions. 

Freeh is a former director of the FBI and former federal judge. Ridge is a former secretary for Homeland Secretary and former governor of Pennsylvania.