Bet Against This Campaign

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Posted July 26, 2006 by DAN MCGRAW in News

David Carruthers is not a drug dealer or terrorist or counterfeiter, but he sat in the federal jail in Fort Worth last week nonetheless. Carruthers is British, runs a business out of Costa Rica, and was picked up while changing planes at DFW International Airport.

Carruthers is the CEO of a company – BetOnSports PLC – that accepts bets on sporting events over the internet. The U.S. Justice Department alleges that Carruthers and other defendants have committed conspiracy, racketeering, and fraud in taking sports bets from U.S. residents. Two weeks ago, the U.S. House of Representatives passed a bill that would make it illegal for American banks and credit card issuers to make payments to online gambling sites. The bill makes exceptions for horse racing and state lotteries.

For the feds to spend time and money chasing guys like Carruthers is complete madness – businesses like his are the illegal exception in today’s mostly legit betting world. If you want to bet on sports, you can do so legally in Nevada. If you want to wager locally, run down to the 7-Eleven and buy a lottery ticket. Want to gamble at a casino? Drive to Oklahoma or Louisiana. And if gambling online is your thing, buy stocks over the internet and bet that the value will go up.

The U.S. government’s policy on gambling is based on American culture as it existed more than 50 years ago. The mob ran the numbers racket, and bookies sat in bars and took bets. Gambling was seen as a moral issue, criminal activity that degenerates wallowed in.

But over time, states took over the numbers biz with their lotteries, and casinos were legalized in many states. And if you want to bet on sports, you can now click and pick teams online and technically make your bet in a country like Costa Rica, where it is legal. No reason to hang out with the bookies in bars.

The charges against Carruthers are based on pre-internet mob-related laws. While the bet is legally being taken offshore, phone lines are used to transfer the bet, and in America, that is illegal. Thus the charges of racketeering and the rest. (Using a satellite phone or cable modem is uncharted legal territory, however.)

The reason sports betting is so reviled by our government is, again, decades-old assumptions. Sports leagues feared players could be bought off by gamblers, and throwing games was a real possibility. But that was before athletes’ salaries went through the roof with free agency. Think of it this way: How much money would it take to bribe a player to throw a game when he is making $10 million a year?

So there has to be another equation at work to explain the situation, and as usual it has to do with counting votes and campaign dollars, not gambling receipts. Many older, Christian conservatives see gambling as a sinful vice, and politicians in Austin and Washington see the benefits of catering to them. Those who support gaming interests just aren’t as passionate about it as those who oppose them.

But Texas is missing the boat on many fronts because of this anti-gambling attitude. Money flies out of the state every day to Oklahoma and Louisiana as Texans go there to sit in front of slot machines. A state lottery based on picking pro games could probably fund the school system in football-mad Texas. And if the feds wanted to make the online sports betting biz work for them better, they could regulate it and tax it and keep a percentage of the billions of dollars that travel offshore every year.

In a poll of Texans by the Scripps Research Center last year, 60 percent of the respondents said that casino gambling should be legalized and taxed to help fund schools; 68 percent said they favored slot machines at horse or dog tracks. But even though the majority favored allowing more gambling options, a slight majority of the older voters opposed the idea. And the older voters get to the polls more.

I’m not a gambling nut. I have never bet on sports and don’t find casinos much fun. On a three-day business trip to Las Vegas a few years ago, I dropped $1.25 on slot machines. But the fight against gambling these days has reached a point similar to the banning of alcohol during Prohibition. The moral majority showed the country the evils of booze and thought the world would be better if it were eradicated. But people just drank anyway. Then the government got wise and figured if the people were going to drink regardless, it might as well tax the booze to balance out the social ills it causes.

Social ills come along with gambling as well. But instead of finding ways to regulate and tax those games, we are throwing people in jail who operate online sports betting services. If that is the attitude, maybe we should jail all the people who bet on the NCAA basketball tournament in their office pools.

I’ll bet some of the Justice Department lawyers had money down this year during March Madness. Anyone want to take me up on that one?

 


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