Congressman pushes bankers to help stop internet gambling

I had an opportunity to listen to Congressman Jim Leach earlier this week speak about the growing phenomenon of internet gambling. It is illegal to gamble over the internet in the United States, but internet gambling web sites are among the fastest growing category of web businesses. Rep. Leach has introduced legislation to improve the enforcement of laws prohibiting internet gambling.

I have had the chance to cover Rep. Leach for more than 15 years and I have a great deal of respect for this Republican from Iowa, who often is called the smartest man in Congress.

“The fastest growing financial industry in the world and in the United States today, probably by a quantum measure, is gambling,” said Rep. Leach. He said $6 billion per year is wagered over the internet. “In the last five years, it’s grown three-and-a-half fold; it could grow at least that in the next five years.

“In gambling, in general, there are about 2 percent who participate who become what are called ‘pathological’ gamblers, which means they absolutely cannot stop. There are about 5 percent who become ‘problem’ gamblers, which means they can hardly stop, and about 20 percent of bankruptcies relate to gambling,” said Rep. Leach.

Rep. Leach’s legislation, which was approved by the House of Representatives, would prohibit banks and credit card companies from settling internet wagers involving credit cards. “If it works it is clearly worth it. If it doesn’t work, we will all have to reconsider,” Rep. Leach said.

Rep. Leach said he hopes the Senate takes up the legislation this fall. It will be interesting to see what happens. If credit card companies stopped honoring wagers made over the internet, they could shut down the internet gaming business instantly. But most bankers don’t like the idea of being cops. Bankers already don’t like their role in the Patriot Act and other anti-terrorism measures which require them to take extra steps to look for money-laundering. While most bankers would agree that internet banking is a problem, it will be interesting to see whether any believe they should be required to do anything about it.

“I personally think bankers ought to be amazingly sympathetic to this kind of approach because of concern for your customers, and concern for other Americans in a society that wants to save rather than go for the big pot at the end of the rainbow,” Rep. Leach told a group of bankers in Des Moines on Monday.

Rep. Leach said internet gambling is a particularly serious problem among college students, citing one study that estimated 10 percent of college students gamble on line. “The number of college males who reported gambling on line once a week or more increased four fold last year alone,” Rep. Leach said. “Never has it been so easy to lose so much money so quickly at such a young age.

“Gambling through the internet has been brought to the home and to the bedroom. It’s been brought to the office, to the college dorm, and increasingly in the very near future, to cell phones and Blackberries so you can gamble to and from work or while waiting in a movie line,” Rep. Leach said. “This is a very serious phenomenon.”