The ban on Internet gambling is misdirected - and it's also probably unenforceable. People will still gamble on the Web, just without the protections that a legal framework could provide to ensure age-verification and protection against fraud. And online gambling now generates $13 billion a year; under the ban, online gamblers won't send a portion of that cash in tax dollars to the Treasury - instead, it'll go to scam artists and gray market entrepreneurs.
The Internet poses new challenges and problems. When the music industry ignored the massive and growing consumer desire to access songs online, a piracy industry blossomed. Similarly, our bans on Internet gambling have been effective only in pushing the business off U.S. shores and out of the hands of scrupulous businesses. By contrast, simply taxing Web betting would generate significant revenues that could be used for a variety of domestic priorities.