Prohibition going through the same illogical cycle

It is said that one of the greatest forms of stupidity is continuing to do the same thing and expecting different results. It was the case with prohibition early in the 20th century and the same mistakes are being made again currently with online gambling.

Prohibition was basically a ban on the manufacturing and selling of all forms of alcohol between 1920 and 1933. There was the naïve misconception that if this was done, that there would be a definite decline in crime, lawlessness and all of the resulting bad and immoral behaviour. This view was however the view of a few about a few.

When it comes to alcohol use the vast majority of people who consume alcohol do so in moderation, with the minority abusing it. That was the case during and before prohibition and it is still the case now. The decision was however made by the US government to stop any use of alcohol.

What happened was however not the desired outcome. They killed a large section of the economy with wine, beer and other huge liquor manufactures going out of business. The manufacturing and sale of alcohol moved underground and a whole new breed of criminals started popping up. There was less work, still almost the same amount of alcohol use and countless dollars going into trying to police the situation.

What was hurting the government however was that they weren’t earning any taxes from this huge industry, but only throwing money at it through trying to police it. Something that went hand in hand with Prohibition was the Great Depression. Although the Great Depression hit worldwide, it originated in the US.

It is ridiculous to imply that the Great Depression was caused by Prohibition, but there is merit in that it could very well have been one of the contributing factors.

So we fast forward to the 21st century…

In the early 1990’s the internet started gaining momentum and one of the largest online industries was created: online gambling. The first gambling sites started operating back in 1994 with licences from some of the Caribbean islands. It soon became an exceptionally popular pass time and was enjoyed by millions globally.

The largest number of people who played online was from the US. People had the option to play all the games they liked without having to leave their homes, which meant no traveling time and much more convenience. Globally the industry is estimated to have generated revenues of $21 billion in 2008.

The US government however decided to clamp down on the industry in 2002. They made it illegal to transact with any form of gaming site. The results are so similar to what happened during the Prohibition, it can only put a smile on your face.

More and more sites were starting to offering ways to get around the laws and started operating in “creative” ways. The government put a lot of money into trying to police the industry, while gaining absolutely nothing from the industry. Around 2007 the Great Recession started, which is also believed to have started in the US.

The interesting coincidence is that a huge growing industry was being targeted again and outlawed. One that millions enjoyed worldwide and a large number of these people are from the US. Could it not have made more sense to take the industry and regulate it rather than going for Prohibition v2.0?

If the industry was regulated and licensing was allowed throughout the US, the taxes alone could have been a tremendous boost to government coffers. In the UK online gambling companies have to pay nearly half of their profits in taxes in order for them to operate over there, but they do it as it is still worth their while.

Once again it would be a bit of a stretch to try and attribute the woes of the Great Recession to a clamp down on the gambling industry. However a huge industry like it could definitely have helped in such a desperate time. It would have generated revenue for the government, created jobs and freed up time for the police to focus on much more important work.