The Wall Street Journal has an article reporting that Senate Majority Leader Harry Reid is circulating a bill to legalize Internet poker.
The Journal reports that three Republican lawmakers sent a letter opposing the idea: "Congress should not take advantage of the young, the weak and the vulnerable in the name of new revenues to cover more government spending," the letter says. The stereotype is that it's the Democrats in Washington pressing for more federal intervention in the free market on the grounds that the young, weak, and vulnerable can't protect themselves from the predations of those ruthless capitalists. Yet here is a case in which it's the Republicans who want protecting children and the "vulnerable" to be a job for the federal government rather than, say, the states, or, even — perish the thought! — parents.
The Journal reports that "The legislation would overturn a bill passed in 2006 that bans financial institutions from processing online-gambling transactions. That led publicly traded companies to pull out from operating online sites in the U.S. In their place, offshore sites have gathered an estimated 10 million U.S. poker players." Sure looks like that 2006 legislation, passed during the George W. Bush administration, worked out well, huh?
Yet, by the Journal's account, Mr. Reid isn't exactly serving as a pure free-market advocate here, either: "Mr. Reid's office is considering language that would allow only existing casinos, horse tracks and slot-machine makers to operate online poker websites for the first two years after the bill passes, which could limit the ability of other companies to enter the market." Wouldn't want too much competition. Where's the concern about the young, the weak, and the vulnerable when it's really needed?
And: "The bill as drafted would send taxes on wagers to both federal and state governments." Making both governments a partner with a financial incentive to see gambling increase. Given that the federal government and many state governments already tax gambling income, and that the profits generated by the online poker companies would presumably be taxed at the corporate level and then again at the shareholder level (as dividends or capital gains), what's the justification for taxing the wagers?
The whole situation looks like a classic demonstration of how both parties in Washington operate.