The U.S. government usually wins the prize for prudish hypocrisy. There's no place more obvious than gambling, which provokes all sorts of convoluted posturing and lawmaking.

Alarmed that people are using the Internet to place bets, the Bush Administration pushed through the 2006 Unlawful Internet Gambling Enforcement Act, which requires financial institutions to put regulations in place to prevent payments for illegal gambling. The government defined illegal gambling as any bet made from a state where it is illegal.
The U.S. Treasury announced this week that it was putting regulations in place to enforce the provisions of the act, two months before the current Administration leaves office.

Lobbyists for banks and some legislators have objected, saying the banks are being forced to mediate between state laws and federal laws, putting them in an uncomfortable role as enforcers.

Rep. Barney Frank (D-Mass.), who heads the house financial services committee, said the Bush Administration was trying to saddle the incoming Obama administration with implementing an unenforceable rule while the financial industry is in crisis.

Ironically, the gambling industry has been reporting results that suggest it is holding up better than its counterparts in traditional finance. Playtech, a company that provides software to major purveyors of online gambling, reported a 78 percent increase in revenue in the first three quarters of the year.

British bookmaker William Hill, which recently chose Playtech to power its online betting (which is legal in the UK), reported last month that its total gross win - the amount the company retains after paying off gamblers, had risen 9 percent in its last quarter. Gross win from its interactive business was up 21 per cent. “We are not seeing a slowdown,” Ralph Topping,  the company's chief executive said at the time.

The fact remains that millions of Americans place bets illegally the old fashioned way, by phone or email to their bookies - and to online to gambling businesses outside the U.S. by various convoluted methods.
And the greatest hypocrisy is how legal gambling through state lotteries, Indian casinos, slot machines and other means has soared in the U.S.

One study said the amount Americans spend on gambling grew 1600 percent between 1976 and 1997. The American Gaming Association, an industry group, estimates Americans spent almost $91 billion gambling in 2006.

But in trying to protect Americans from the risks of gambling, the government overlooked the vast casino that evolved in sub-prime mortgages, securitization, and credit default swaps. Legalizing online gambling would at least let U.S. consumers when they are playing Russian roulette with their money.