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Press Release

Laws Restricting Online Gaming have Unintended Consequences

The recent cheating scandal at the AbsolutePoker and UltimateBet websites has many calling for even more restrictions or an outright ban on online gaming. FreedomWorks, a grassroots organization that promotes market-based solutions to public policy problems, views the issue differently: it is a good example of the unintended consequences of government activity.

In this instance, laws and regulations have driven the industry offshore, which may expose consumers to greater risks than they would face in a more open environment for online gaming.

“There is no reason online gaming should be inherently more dangerous than purchasing a flat screen TV online,” said Wayne T. Brough, chief economist for FreedomWorks. “If anything, the incident demonstrates the dangers of government policies that drive online gaming offshore or underground, beyond the rule of law.”

Markets are built on a trust between buyers and sellers, and the rule of law offers a greater degree of confidence by providing a way to enforce contracts and settle disputes. “Instead of trying to ban what is a popular, billion dollar market with millions of fans, consumers should be assured they have every protection that they enjoy when they make any other transaction—online or in the local store.”

As a consumer group that promotes the benefits of competition, FreedomWorks believes that the best way to avoid future scandals is to allow markets to work while ensuring consumers access to the full force of the law in the case of irregularities or illegal activities. “The solution is not to drive the industry underground and offshore,” said Brough, “Rather, it is to ensure that online gamers have access to the rule of law and that providers of online gaming face strict market discipline, where trust can be rewarded and a breach of trust means a business is not viable.”

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