So I’m listening to the Gonzales hearing and some senator has sidetracked the discussion onto the subject of internet gambling. He, with Gonzales’s agreement, asserted that it is vital to outlaw internet gambling because they functioning as unregulated banks and are thus perfect vehicles for money laundering, terrorist financing and tax evasion.

Now perhaps he just meant that given we outlaw internet banking it is important to shut down easy financial transactions with the companies. This seems to be a reasonable position. However, it’s an insoluble problem of our own creation. There are simply too many otherwise law-abiding US citizens who are and will continue to engage in internet gambling and their will always be offshore bank accounts and other means for them to do so. This flow of relatively innocuous money will disguise any genuinely criminal money being laundered or tax being evaded.

Of course we could easily eliminate the problem entirely by simply legalizing internet gambling for properly licensed companies. This would bring all those cash flows into a regulated system as well as allowing us to institute protections against problem gamblers, e.g., laws that require internet gambling entities to stop people from playing after they’ve lost too much money in a given time period or receive some sort of notification that this person is a problem gambler. Also it would bring us in line with the WTO guidelines.

But no, that would be far too rational for the US to ever do.