Read It and Weep: The Case for Legalizing Online Gambling

Preet Bharara, the U.S. attorney for the Southern District, recently announced the indictments of 11 individuals connected to three Internet poker companies that allegedly took in or laundered billions of dollars in illegal gambling schemes. The scope of the criminal activity was shocking: The government moved to close down more than 75 bank accounts that the companies in question used for their multibillion-dollar operation.

The government charged that the companies disguised their illicit gains by laundering them through phony online merchandising outfits. These illegal maneuvers were intended to avoid federal laws that seek to regulate Internet gambling. The sites were based offshore, but the companies continued to do business in the United States.

If they are found guilty, those responsible for this elaborate scheme deserve to be punished. As Mr. Bharara said, “Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”

That said, it’s time the federal government recognized reality and legalized online gambling. At a time of severe fiscal constraints, online gambling could produce much-needed tax revenue for starved local and state governments. It’s the very logic that led state after state to set up lotteries in the 1970s. The numbers racket was a thriving enterprise of organized crime. The lotteries, in essence, took the game out of the mob’s hands to the benefit of public treasuries.

New Jersey came close to legalizing online poker earlier this year, but Governor Christie vetoed the bill because of a technical issue; he nonetheless believes that online gambling will benefit New Jersey’s gaming mecca, Atlantic City. New Jersey State Senator Raymond Lesniak is preparing a new version of the bill that will address Mr. Christie’s concerns that the gaming sites be based in Atlantic City, not elsewhere in the state where gaming is prohibited.

New York should do likewise. Online gambling is only going to grow. Yes, law-enforcement officials are right to punish those who brazenly break the law. (One of the poker sites targeted by the feds, Poker Stars, recently announced a partnership with gaming impresario Steve Wynn, an agreement that Mr. Wynn has now nullified.) But the laws should change to benefit legit operators who will abide by government regulations. It would be a great benefit to cash-strapped states and taxpayers. Read It and Weep: The Case for Legalizing Online Gambling